Fault Lines

Doug Nolan

Now on a weekly basis, we're witnessing things that couldn’t happen – actually happen.

April 20 – Bloomberg (Catherine Ngai, Olivia Raimonde, and Alex Longley): “Of all the wild, unprecedented swings in financial markets since the coronavirus pandemic broke out, none has been more jaw-dropping than Monday’s collapse in a key segment of U.S. oil trading. The price on the futures contract for West Texas crude that is due to expire Tuesday fell into negative territory -- minus $37.63 a barrel.”

For posterity, the latest numbers on U.S. monetary inflation:

Federal Reserve Assets expanded $205 billion last week to a record $6.573 TN.

Fed Assets surged $2.307 TN, or 56%, in just seven weeks.

Asset were up $2.645 TN over the past 33 weeks.

M2 "money" supply surged $125bn last week to a record $16.870 TN, with an unprecedented seven-week expansion of $1.362 TN.

M2 inflated $2.329 TN, or 16.0%, over the past year. Institutional Money Fund Assets (not included in M2) jumped $123 billion last week.

Over seven weeks, Institutional Money Funds were up $845 billion.

Combined, M2 and Institutional Money Funds jumped a staggering $2.207 TN over seven weeks ($100bn less than the growth of Fed Assets).

It's increasingly clear this pandemic is striking powerful blows at the most fragile Fault Lines – within communities, regions, societies, nations as well as the world order.

To see this disease clobber the most vulnerable ethnic groups and the downtrodden only compounds feelings of inequality, injustice and hopelessness.

It is as well stunning to watch COVID-19 hasten the partisan brawl. A nation terribly divided is split only more deeply on the process of restarting the economy. To witness rival global superpowers plunge further into accusation and enmity.

And to see the coronavirus viciously attack Europe’s fragile periphery, further splitting a hopelessly divided Europe and pressuring a critical global Fault Line.

There are these days three critical international Fault Lines – Europe, the emerging markets and China - that were demonstrating heightened fragility even prior to the pandemic’s catastrophic blow.

Europe – with its structurally weak economies, fragile banking systems, social and political instability, and vulnerable euro currency regime – is a precarious Fault Line.

In particular, COVID-19 is absolutely clobbering Europe's own internal Fault Line. Spain and Italy trail only the U.S. in global infections. European ministers met again yesterday in an attempt to cobble together some type of agreement for an EU COVID stimulus package.

Italian yields rose five bps this week to 1.84%. There’s more to the story. Yields traded as high as 2.27% in Wednesday trading, up 48 bps in three sessions to the high since global markets were “seizing up” back on March 18th.

Heading into Thursday’s EU emergency meeting, yields were up across the Europe’s periphery.

At Wednesday trading highs, a three-session surge had yields up 37 bps in Spain, 36 bps in Portugal, and 50 bps in Greece.

April 23 – Associated Press (Lorne Cook and Raf Casert): “European Union leaders agreed Thursday to revamp the EU’s long-term budget and set up a massive recovery fund to tackle the impact of the coronavirus and help rebuild the 27-nation bloc’s ravaged economies, but deep differences remain over the best way to achieve those goals… But the leaders did agree to task the European Commission with revamping the EU’s next seven-year budget — due to enter force on Jan. 1 but still the subject of much disagreement — and devise a massive recovery plan. While no figure was put on that plan, officials believe that 1-1.5 trillion euros ($1.1-1.6 trillion) would be needed.”

April 23 – Bloomberg (Birgit Jennen): “German Chancellor Angela Merkel called for a Europe-wide economic stimulus program to be financed by the European Union’s budget, making a national appeal that helping partners would be good for Germany. ‘A European growth program could support an upswing over the next two years, and we’ll work for that,’ Merkel said in a speech to the lower house of parliament in Berlin… ‘We want to act quickly in Europe, and we of course need instruments to be able to quickly deal with the effects of the crisis in all member states.’ She urged German lawmakers to move fast to make a planned 500 billion euros ($540bn) in EU spending available as soon as June 1.”

EU ministers, once again, kicked the can down the road – which spurred a decline in periphery yields. Who will pay for massive - Trillion plus - stimulus spending plans – other than the ECB?

Italy came into this crisis with national debt-to-GDP approaching 140%.

In a likely scenario of GDP contracting 10% - and with debt surging at least 20% this year and growing rapidly again next year – it’s not long before Italy is facing an unmanageable 200% of GDP debt load. Conservative estimates have Portugal government debt expanding to 146% of GDP this year and Greece to 219%.

Italy’s weak coalition government is arguing for the EU to issue system-wide “coronabonds,” then employing these funds for grants to troubled nations. Germany, the Netherlands, Austria and other “northern” nations remain adamantly opposed to debt mutualization.

The Conti government is warning EU officials that Italy cannot handle a surge in debt issuance - and will not put its citizens through Greek-style austerity and debt restructuring. I don’t see Germans and Italians sharing a common currency as unsustainable over the longer-term.

I have expected hardship that would accompany the piercing of the global Bubble to again place European monetary integration at risk. Italy’s deteriorating circumstance risks sparking public support for exiting the euro.

April 24 - Bloomberg (Alessandra Migliaccio): “Italy’s credit grade was left unchanged by S&P Global Ratings, which said the nation’s diversified and wealthy economy, net external creditor position and low levels of private debt partly offset the drag from high public leverage. The BBB rating is still just two notches above junk, and S&P kept its negative outlook, which means the risk of a downgrade remains. The country’s financial position has been severely weakened by the cost of dealing with the coronavirus… The country’s rating could be lowered if the ratio between government debt and gross domestic product ‘fails to shift onto a clearly discernible downward path over the next three years, or if there is a marked deterioration in borrowing conditions that jeopardizes the sovereign’s public finance sustainability,’ S&P said.” 

COVID-19 will hasten the loss of confidence in myriad institutions.

The rating agencies will not go unscathed. Italy investment-grade?

Only massive ECB purchases have kept debt service costs manageable. And who would purchase Italian bonds today if not for the unstoppable ECB backstop?

What are the ramifications for the ECB loading up on such unsound debt?

The euro traded down to almost 1.07 vs. the dollar in Friday trading – near one-month lows.

A euro breaking lower on heightened concerns for periphery debt and euro zone integration would only add fuel to the dollar’s upside dislocation.

The dollar index was back above 100 this week.

With king dollar already benefiting from the U.S.’s competitive advantage in fiscal and monetary stimulus, an additional push from a euro crisis would place only more pressure on faltering EM currencies (including the renminbi).

The Brazilian real’s 6.2% drop this the week increased y-t-d losses to 27.8%. Brazil’s local currency bond yields surged 167 bps this week to 8.77%.

Dollar-denominated yields surged 40 bps to 5.04%, the high since March 19th.

Brazil’s Credit default swap prices surged 78 bps to 368 bps, the high since March 31st – and only 14 bps below the closing high from March 18th. Brazilian stocks sank 5.5% in Friday’s selloff, increasing y-t-d declines to 34.9%.

Ominously, Banco do Brasil sank 15.6% this week, boosting 2020 losses to 54%.

Banco Bradesco fell 14.5% (down 48.5% y-t-d).

Brazil as an EM crisis Fault Line?

April 24 - UK Guardian (Dom Phillips): “Brazil’s government has been plunged into turmoil after the resignation of one of Jair Bolsonaro’s most powerful ministers sparked protests, calls for the president’s impeachment and an investigation into claims he had improperly interfered in the country’s federal police. In a rambling televised address…, Brazil’s embattled president denied claims from his outgoing justice minister Sérgio Moro that he had sought to appoint a new federal police chief in order to gain access to secret intelligence reports… ‘Sorry Mr Minister, you won’t make a liar of me,’ Bolsonaro declared… Moro’s bombshell allegations sparked pot-banging protests and an immediate outcry among Brazil’s political class, with Brazil’s prosecutor-general Augusto Aras requesting supreme court permission to launch an investigation. ‘Moro’s testimony … constitutes strong evidence for an impeachment process,’ tweeted Flávio Dino, the leftist governor of the northeastern state of Maranhão.”

This week’s EM currency weakness wasn’t limited to Brazil. The Mexican peso sank 5.1%, with y-t-d losses up to 24.2%. The Colombian peso was down 2.5%, the South Korean won 1.4%, the Hungarian forint 1.4%, and the South African rand 1.2%. Notable y-t-d EM currency declines include the South African rand’s 26.5%, Colombian peso’s 19.0%, Russian ruble’s 16.9%, Turkish lira’s 14.7%, Chilean peso’s 12.5%, Hungarian forint’s 10.4%, Indonesian Rupiah’s 10.0%, Argentine peso’s 9.9% and Czech koruna’s 9.7%.

EM booms were a central facet of the global bubble, thriving from a confluence of overheated domestic credit systems and booming Chinese demand and credit excess, along with unparalleled leveraged speculation and international inflows.

International speculative flows would gravitate freely into EM booms, only to eventually be trapped by collapsing currencies, illiquidity and capital controls – come the arrival of the bust. After the most protracted of booms, I believe a historic bust has commenced. The shocking precision of COVID-19 strikes on the susceptible – this week in Brazil.

Collapsing EM currency and bond prices were key aspects of March’s “seizing up” of global markets. Central bank policy measures – including the Fed’s expanded international swap arrangements – along with the global rally have somewhat stabilized “developing” markets.

Yet EM remains the global financial system’s weak link.

EM has added unprecedented amounts of debt during this long cycle, too much dollar-denominated. Widespread debt restructuring and defaults seem unavoidable.

EM now faces a very difficult road ahead. “Hot money” outflows have commenced, currencies have faltered, and bond markets have turned unstable. Acute financial and economic fragilities have begun to surface.

Importantly, EM central banks lack the flexibility to employ monetary stimulus to the extent enjoyed by the major central banks. Liquidity injections risk exacerbating outflows and currency crises, at the same time stoking inflationary pressures and bond yields.

Sinking EM currencies and bond prices then incite panicked “hot money” outflows, dislocation and financial crisis.

To make a bad situation worse, aggressive stimulus by the Fed bolsters U.S. Treasuries and securities markets, drawing international flows to king dollar. The stronger dollar then further pressures EM currencies and stokes de-risking/deleveraging dynamics.

EM has entered what I expect will be a deep multiyear downcycle, with far-reaching market, financial, economic, social and geopolitical ramifications. Emerging market economies, certainly including China, played a powerful role as the “global locomotive” pulling the world out of the previous crisis period.

They will now act as a major economic drag – and a Fault Line for global financial crisis.

The danger in the global coronavirus recovery will be inertia

A make-do-and-mend approach will not be enough — we need a societal transformation

Philip Stephens

web_Coronavirus and Financial crash
© Ingram Pinn/Financial Times

Peer through the fog and the world after coronavirus takes on different shapes. Some of the boundaries have been drawn.

The economic legacy of the pandemic will include steep falls in output, widespread business failures, higher unemployment and a pile-up of fiscal deficits. The world’s richest nations will be at once poorer and more indebted. Capitalism will get a new look.

Governments that have bailed out businesses are likely to demand a bigger say in how they run their affairs. Taxes will have to rise. Politicians will look to nurturing national champions, particularly in sectors such as pharmaceuticals. Checks at borders will become more common, and, domestically, states may hold on to the powers of surveillance they have assumed during the crisis.

Whether this adds up to a once-in-a-generation transformation, that shifts permanently the balance of power within societies and remakes relationships between states, rests on the decisions of political leaders. Populism will tug them towards flag-waving nationalism, prefacing another turn towards deglobalisation.

Inertia will make the case for attempts to muddle through, with adjustments at the margins.

Enlightened self-interest should frame an opportunity for liberal democracies to refurbish a threadbare social contract.

A turn of the nationalist ratchet would see fearful societies retreat behind frontiers. Pulling in the opposite direction, Covid-19’s lethal disregard for national borders underscores the link between global interdependence and the need for structures of co-operation. The outcome of this contest is not preordained. The new landscape will be a matter of political choice and leadership.

A cautionary tale lies in the response across rich democracies to the financial crisis of 2008.

Politicians then might have drawn two important lessons from the collapse of the world’s financial system and the economic recession that followed. The “anything goes” capitalism of the so-called Washington consensus had led large segments of the electorate to withdraw their consent for this model of the market economy. And a version of globalisation that had served largely to enrich the top 1 per cent at the expense of most of the rest had discredited the case for liberal, open markets.

Yet governments responded with austerity programmes that nationalised the losses of the financial sector and loaded them on to the shoulders of everyone else. The bankers got a gentle rap over the knuckles; workers on low incomes faced wage freezes and deep cuts in the welfare state.

The US went its own way. Eurozone governments fell to fierce arguments about how the costs should be shared between the strong and weak.

There was no mystery about Donald Trump’s presidential election victory in 2016, about Britain’s decision to quit the EU, or about the rise of parties of the far-right and left across Europe. The populists were giving voice to real grievances among the “left-behinds”.

Paying for the pandemic will raise all the same questions. A return to austerity would be madness — an invitation to widespread social unrest, if not revolution, and a godsend for the populists. Over time — a long time — the fiscal bills will have to be paid.

Liberal democracy, however, will survive this second great economic shock only if the adjustments are made within the context of a new social contract that recognises the welfare of the majority over the interests of the privileged.

Low-paid workers in precarious employment took the hit after the 2008 crash. They will not be willing to do so again. Coronavirus should have taught us that our economies cannot function without all those minimum-wage workers caring for the sick and elderly, stocking the supermarkets and delivering Amazon’s parcels. The notion of fairness has acquired political potency.

Some shortening of global supply chains is inevitable. Yet the pandemic has exposed just how far even the richest nations are from strategic self-sufficiency. The international scramble for tests, drugs and equipment to fight Covid-19 will push politicians towards more state planning.

We may end up with what the French public servant Pascal Lamy calls “globalisation with Chinese characteristics”.

Short of permanently sealing borders and returning to subsistence economics, the pandemic has shown that governments cannot escape international interdependence. Most obviously, the world needs to invest more rather than less in integrating efforts to combat global disease — in methods of tracking, therapeutic drugs and vaccines.

As during the years after 2008, the big danger is inertia — that politicians exhausted by fighting the disease take a make-do-and-mend approach. In this outcome a little more welfare spending here, a touch of interventionism there, and a dose of protectionism in strategic sectors are considered enough.

They won’t be. Instead, halfhearted reform will simply renew the invitation to populists to take up arms against liberal democracy.

This week, Angela Merkel took up the cause of enlightened self-interest. The pandemic, the German chancellor said, presented the EU with the biggest challenge since its foundation. The response, she added, must be about solidarity: “about showing that we are ready to defend our Europe, to strengthen it”.

These are fine sentiments, even if delivered many weeks after they were needed. Now we must wait for signs of action.

Reopening Has Begun. No One Is Sure What Happens Next.

The heated debate over when to restart the economy has obscured an issue that could prove just as thorny: How to do it.

By Ben Casselman

The Broadwalk Restaurant in Hollywood Beach, Fla. Restaurants generally have tight profit margins even in the best of times. Credit...Scott McIntyre for The New York Times

The economy shut down almost overnight. It won’t start back up that way.

Politicians and public health experts have sparred for weeks over when, and under what circumstances, to allow businesses to reopen and Americans to emerge from their homes. But another question could prove just as thorny — how?

Because the restart will be gradual, with certain places and industries opening earlier than others, it will by definition be complicated. The U.S. economy is a complex web of supply chains whose dynamics don’t necessarily align neatly with epidemiologists’ recommendations.

Georgia and other states are beginning the reopening process. But even under the most optimistic estimates, it will be months, and possibly years, before Americans again crowd into bars and squeeze onto subway cars the way they did before the pandemic struck.

“It’s going to take much longer to thaw the economy than it took to freeze it,” said Diane Swonk, chief economist for the accounting firm Grant Thornton.

And it isn’t clear what, exactly, it means to gradually restart a system with as many interlocking pieces as the U.S. economy. How can one factory reopen when its suppliers remain shuttered? How can parents return to work when schools are still closed? How can older people return when there is still no effective treatment or vaccine? What is the government’s role in helping private businesses that may initially need to operate at a fraction of their normal capacity?

Some states are starting to lift restrictions put in place to curb the coronavirus pandemic.

South Carolina, for example, looks likely to be among the first states to allow widespread reopening of businesses. But if a manufacturer there depends on a part made in Ohio, where the virus is still spreading, it may not be able to resume production, regardless of the rules.

“We live in an economy where there are lots of interconnections between different sectors,” said Joseph S. Vavra, an economist at the University of Chicago. “Saying you want to reopen gradually is more easily said than done.”

The White House released a plan this month for a phased reopening of the economy, with restrictions easing as states meet public health benchmarks. States have begun to develop their own road maps. Gov. Andrew M. Cuomo of New York said Tuesday that parts of the state that had fewer coronavirus cases might be allowed to reopen more quickly than New York City and other hard-hit areas.

But those proposals are mostly rough schematics, leaving unanswered crucial questions about how the process will play out at the ground level. Those details may help determine whether the economy will bounce back relatively quickly once the pandemic ebbs or the United States will face a slow, painful turnaround, as it did after the last recession.

Under the White House’s three-phase plan, many businesses will be allowed to open in the first phase. Schools and day care centers will need to wait for the next phase. That means that millions of working parents could be asked to return to their jobs before they have any way to take care of their children.

Mr. Vavra and two colleagues recently estimated that nearly one-third of U.S. households have a child under 14, and that more than one in 10 has no other adult in the household to help with child care. In addition, many reopening plans call for younger adults to return to work first, while people over 55, who are at greater risk of severe complications or death, stay home longer to avoid exposure. But younger adults are also more likely to have young children at home.

Then there is the public health threat: If states reopen their economies too quickly, or without the right precautions in place, that could lead to a renewed outbreak, with dire consequences for both safety and the economy.

“The biggest risk is that you open too fast, too broadly, and you have another round of infections, a second wave,” said Mark Zandi, chief economist for Moody’s Analytics. “That’s the fodder for an economic depression. That would just completely undermine confidence.”

Partial reopening may not work for everyone.

In the early phases of reopening, businesses will almost certainly be required to operate at reduced capacity to allow for greater social distancing. That will require changes for virtually all companies, but in many cases it won’t present insurmountable hurdles.

Offices, for example, might operate in rotating shifts, with different departments coming in on different days and deep cleanings performed in between. In factories, production lines could be redesigned to allow more distance between workers and to reduce or eliminate contact between teams.

But other businesses could have a much harder time adapting. Most restaurants, for example, have tight profit margins even in the best of times. Operating at half capacity — or less — will mean losing money for many restaurants.

“It’s impossible in the restaurant business to be profitable at a 50 percent revenue clip,” said Alex Smith, president of the Atlas Restaurant Group, which operates upscale establishments in Baltimore, Houston and other cities.

For restaurants that were struggling before the shutdown, or that weren’t yet established enough to turn a profit, owners could decide that restocking kitchens and redesigning dining rooms to allow for social distancing is not worth the expense.

“If you were profitable before and your business was growing, then you need to hold tight and hope that there’s light at the end of the tunnel and things will come back,” Mr. Smith said. But if you were losing money before, “you really have to ask yourself, are you digging a deeper hole?”

Confidence is crucial.

The public debate has focused on government mandates: When should city and state shutdown orders be lifted? But just because businesses are allowed to reopen doesn’t mean that they will or, if they do, that customers will return.

Data from OpenTable, the restaurant reservation service, shows that people largely stopped eating out even before governors and mayors recommended doing so, and well before official shutdown orders took effect. Evidence from Sweden and other countries that have avoided formal lockdowns likewise shows that people have sharply reduced their activities even without government mandates.

“I don’t think it was really the government shutdown orders that shut down the economy — I think it was the virus that shut down the economy,” Mr. Vavra said. “Saying the economy is now opened is just lip service. The economy’s not going to be reopened until people want it to reopen.”

So far, there is little evidence that the public is ready. Despite scattered protests, surveys show widespread support for shutdown orders and little appetite for a rapid return. A recent Wall Street Journal/NBC News poll found that most Americans were more worried about lifting restrictions too early than keeping them in place too long.

“There’s no restaurateur in the country that believes that when the government says ‘Go,’ the restaurants will be packed again,” Mr. Smith said.

Mr. Smith’s greatest fear, he said, is that Americans will rush back to daily life too quickly, resulting in another flare-up and another lockdown. He can borrow money and reach into savings to reopen once, he said. A second time could be too much to manage, especially because a false start could leave customers even more wary.

“What scares most of us is Wave 2,” he said.

The government’s role isn’t finished.

The federal government has already spent extraordinary amounts to keep individuals and businesses afloat during the economic shutdown. Congress approved another half-trillion-dollar aid package in recent days, with more help expected in coming weeks.

But economists say the government’s role is only beginning.

Businesses will need help weathering a period of reduced sales. State and local governments will need help, too, or they will have to cut programs to offset a sharp drop in tax revenue.

Individuals will need unemployment benefits, food assistance and other aid to make ends meet in a recession that will almost certainly outlast the pandemic.

The scope of those problems isn’t yet clear. No one knows how many businesses have failed permanently, rather than shut down temporarily, or how many laid-off workers will be able to return to their old jobs. But the longer the shutdown lasts, the more permanent the damage will be, and the slower the rebound.

“You can press pause for a period of time, but not too long before that becomes bad loans and defaults and so on,” said Shubham Singhal, a senior partner at McKinsey, the consulting firm.

“Then you have the negative cycle that feeds on itself for a while.”

The good news is that the government mostly knows how to deal with that kind of problem.

Unlike the current shutdown, which required policymakers to develop programs in record time, the post-pandemic period will probably resemble a more traditional recession and demand more conventional policy responses.

The bad news is that, historically, political will for these programs has ended long before the need for them. After the last recession, calls to rein in jobless benefits began while the unemployment rate was still close to 10 percent.

Elizabeth Ananat, a Barnard College economist who studies poverty and inequality, said she worried that government support would again dry up before the economy was ready to sustain itself, prolonging the downturn and hurting lower-income families, who are typically the last to benefit from a recovery.

“In some ways, I’m even more anxious about the reopening than I am about the shutdown,” she said.

Why Investor Complacency Could Soon Be Replaced By Primal Fear

by: Altitrade Partners

- There appears to be a second wave of COVID-19 hitting China, Germany, Spain and Singapore while, at the same time, Japan has moved to a national state of emergency.

- Crude oil prices have collapsed to a level that will cause major economic dislocations around the world.

- Relations between the U.S. and China are likely to become more strained as an investigation into the origins of COVID-19 gets underway.

After an initial panic, complacency seems to have resumed among many investors, as the VIX has fallen from a high of 85 to below 40.
We would like to start off this article with a basic premise for what is to follow:
The Coronavirus, and its future path, will be the single-most important factor in shaping the global economy for the next 18-24 months.
Now, that statement might seem obvious to some, but if that is the case, based on the global data that we have been seeing lately, why are there so many individuals who are taking the seriousness of this pathogen so lightly?
And why has the U.S. stock market priced in such a confident view for the short-term resolution of this horrible pandemic, when the best guesstimate by scientists and health officials is that a vaccine will take at least 12-18 months to develop?
We are very bearish on the U.S. stock market, because will believe that the impact of COVID-19 has been severely underestimated by many on Wall Street.
We also believe that we are going to see another leg down in the major stock market averages sometime between now and late Fall of 2020. While we will not attempt to speculate exactly where the bottom will be, we are absolutely convinced that it will be below the March bottom that we have already made.
Part of our thinking is that President Trump is far too optimistic about his timeline to re-open the country for business, and that even if he does accomplish his goal by the early part of June, we do not believe that we will return to "business as normal" for at least another six months after that.

The recent news of several countries around the world facing a second wave of the Coronavirus should cause investors sit up and take notice of how potentially devastating COVID-19 could become; both economically and for society as a whole.

We are beginning to see signs of a second wave appearing in several countries around the world, after initially having some success in containing the spread of this deadly virus.

Those countries include China, the first epicenter of the virus, now along with Germany, Spain and Singapore.


It was announced earlier today that the death toll in Spain has now reached 20,000, placing it in the same category as the United States & Italy.
Recent news over the past week continues to show extremely difficult and troubling data.

Here is just a sampling of recent global news within the past few days:
  • Wuhan revises citywide Coronavirus death toll 50% higher
  • US sees huge spike in deaths on Thursday
  • NYC cancels all 'nonessential' events for the month of May
  • Global death toll passes 150k
  • Illinois closes schools for rest of year
  • NY total cases: 229,642
  • NY reports slight drop in hospitalizations, ICU admissions, but deaths ' basically flat' at 630
  • NJ reports 300+ deaths
  • Italy reports slowdown in new cases but slight uptick in deaths
  • Texas cancels school until end of year
  • France reports 761 new deaths
  • Iran holds 'military parade' with equipment used to fight the virus
  • Spain death toll tops 20k, joining US & Italy
  • Report claims 7,500 died uncounted in UK nursing homes
  • US total cases passes 700k, deaths near 40k
  • NY Post claims nursing home deaths in NY went uncounted
  • Spain extends lock-down by 2 weeks
  • Saudi Arabia reports record new cases for 4th day in a row
  • Sweden reports 606 new cases
  • Belgium reports 1,000+ cases
  • Japan case total passes 10k
  • Phoenix TV station warns of under-counting of deaths
  • Iran death toll crosses 5k as country's reopening begins
  • UK reports another 900 deaths
  • California reported 87 new deaths, bringing its statewide total to 1,072
  • Belgium reported more than 1,000 new cases in 24 hours, with 1,045 new cases of the virus, and 290 new deaths, for a total of 37,183 cases and 5,453 deaths
  • Belgium, the Netherlands and several other countries in Europe, as well as Russia, report a startling acceleration in the virus.
  • LA County revealed that it suffered its deadliest streak yet during the last 24 hours, reporting 81 deaths, along with a huge jump in cases (642).
Source: Zero Hedge

Are investors being myopic by ignoring this kind of data and sticking their heads in the proverbial sand?

Is the world even close to reaching some sort of "normalcy" amidst these distressing headlines? Can we have economic normalcy without social normalcy?

How long will it take for investors to stop minimizing the impact of the Coronavirus on the former by ignoring of the long and arduous timeline necessary to achieve the latter?
According to a recent Gallup poll, even after opening the U.S. economy, many people say they will not return to normal activities immediately.


What could this type behavior do to an anticipated "V"-shaped recovery?
Investors seem totally unprepared to accept that the damage and subsequent long-term economic and social consequences, due to the initial wave of the Coronavirus, have not been adequately discounted in equity prices.
Are we prepared for the possibility that we could experience a second, more deadly, wave of COVID-19 as we move towards the early autumn months?
This is the importance of social distancing, said Michael LeVasseur, a visiting assistant professor of epidemiology and biostatistics at Drexel University’s Dornsife School of Public Health. Since individuals are likely capable of transmitting the virus when they are asymptomatic, limiting the number of contacts any individual has to the household, for example, will limit the spread of the virus. 
So, what happens if we loosen up social distancing measures? It depends on the point in the so-called “curve” that each state or municipality decides to lift its guidelines. 
If we have the public health infrastructure that individuals can report to a testing clinic to receive a test and then self-isolate while awaiting results, maybe it would work, LeVasseur said. If we don’t, then they’ll likely continue infecting people and we will see a surge of cases. 
I don’t believe that we go back to normal at all, LeVasseur said. Not until there’s an effective treatment or vaccine, anyway. We can regain some semblance of normalcy, but we will need to remain vigilant as citizens and scale up our public health efforts in order to prevent future surges. 
Source: Huffpost
Our observations of the general public show us that not enough people are taking COVID-19 seriously; that puzzles and disturbs us. I have even seen this in some of my own family, and have tried to plead the case for taking stronger safety precautions to avoid transmission of the virus to other, older family members.
Not only is the President of the United States downplaying the risks of this global pandemic, but so are many American citizens. Could they be taking their lead from the President? It is apparent that investors certainly are.
President Trump seems to believe that we'll have a "V"-shaped recovery and it will be as if nothing ever happened. The "world's greatest economy ever" will simply pick up where it left off. The fear investors are feeling will pass, along with the virus.
But this Coronavirus could create a different kind of fear; primal-like in nature.
During the Spanish Flu Pandemic in 1918, the second wave of the pandemic resulted in five times more deaths than took place in the first wave.
There were 3 different waves that took place during this historically deadly pandemic. The first wave occurred in March 1918. The second wave took place in the fall of 1918. The third wave that started in the Winter of 1918 finally exhausted itself by the summer of 1919.
It was the second wave of The Spanish Flu that exacted the largest death toll among its victims. In all, over 50 million of the world's population ultimately succumbed to this deadly pathogen.

Source: Center For Disease Control and Prevention

The recent COVID-19 virus also began to claim a statistically significant number of victims in March of 2020. If a second wave were to occur, it is expected to happen as the weather becomes cooler in the autumn months. This would be similar to the pattern seen during The Spanish Flu, which began a second wave in the Fall of 1918.

This second wave, should it happen, would have a major impact on the three most popular sports played in the United States; football, basketball and hockey. All of the playing schedules for these three spectator sports are heavily weighted during the months between September and April.

That would have a tremendous impact on the American lifestyle.
Some are even saying that COVID-19 could become seasonal, like the existing seasonal influenza's that we are accustomed to dealing with every year.
For those who would treat the Coronavirus as just another influenza, remember that the COVID-19 virus killed more Americans in one month than the ordinary flu kills in one year.
The other major difference between COVID-19 and other influenza's, is that with the Coronavirus you can be asymptomatic for up to two weeks. This allows the COVID-19 virus to spread among the general population in a very stealth-like manner.
The speculation regarding where the Coronavirus came from and where it originated has become a topic of much discussion recently.
We expect to see a major deterioration in China-U.S. relations, based on China's apparent part in the spread of the COVID-19 pandemic. Just the other day, during the daily press briefing by the White House Coronavirus Task Force, President Trump was asked about the possibility that the virus may have been manufactured and released by a bio-lab in Wuhan. While he would not go into any details, he made it very clear that he was "not happy."
The necessity of portraying an atmosphere of progress and performance, during the China trade deal negotiations, was a tool used by the Trump administration to slowly cajole the markets higher.
In many ways, they are using many of those same tactics, not to necessarily cajole the markets higher, but to bolster the economic outlook in a post-COVID-19 world, in order to circumvent a stock market meltdown.

President Trump and his economic team, along with The Fed, could not then, and cannot now, afford to disrupt the illusion of the "economic wealth effect", that has kept consumers spending on just about everything, while continuing to push stock prices to historically high valuations.
Trump likes to call himself "The Stock Market President" and any talk that would endanger stock prices from continuing to march onward and upward, is viewed as heresy by the President.
Over the past few months, the stock market has listened to the soothing reassurances of President Trump, while investors have participated in what may well be remembered the greatest bull-trap and sucker's rally in history.
We have long looked at market psychology as an important factor in driving the decision-making process for investors. In fact, we have often said that the market, in its most basic form, is nothing more than "emotions in motion".
Yet, many today do not understand the emotional implications of what this global pandemic means for society and how it could change the deeply ingrained behavioral patterns of investors.

Fear and greed are the two most basic emotions that investors will experience everyday in the financial markets. How you process those two emotions will ultimately determine your success or failure as a trader or investor.
The euphoric feeling of making profits, driven by greed, or the frightening feeling of losing money, driven by fear, are both non-primal like in nature.
While greed has less strength, i.e., emotional impact, on making investment decisions than fear does, it is nonetheless a a contributing factor in the dynamics of the markets.
While greed does not necessarily create an immediate "call to action", the feeling of fear does. How we process these two strong emotions will have a major impact on the actions we take in the financial markets. There is a big difference psychologically in how an investor makes buy and sell decisions based on greed versus fear.

As an example, greed will generally elicit a positive feeling. You are making money; hence you view yourself as being successful in your trading and/or investing activities. That positive feeling can even release endorphins in the brain, leading, many times, to a feeling of being giddy or overconfident.
In these circumstances, you are not required to make an immediate decision because everything is going your way, and you feel that it will most likely continue. You can maintain a somewhat relaxed composure.
On the other hand, fear will usually elicit a negative feeling. It makes you nervous and anxious. Your mind can become distracted when you are fearful. You begin to question yourself when you are in a losing investment position. Your heart begins to beat faster. You may be perspiring. Your hands might be getting sweaty. Your decision-making abilities may become impaired. In its worst form you may begin to sense a lack of control and even experience a sense of fight or flight ---- "I need to get out of this position, NOW".
Oftentimes, when a position is going against you, a feeling of helplessness can surface. As an investor watches a losing position continue to go against them, they sometimes may resort to trying to rationalize a feeling of hope.
Hope is not an investment strategy. The mere fact that an investor would begin to play the mind game of replacing rational, objective thinking with abstract, subjective thoughts should tell you that you are in trouble emotionally.
That is why disciplined traders use stop-losses to eliminate the games that your emotions can play with you in navigating the markets.
Denial is quite normal human behavior. It often acts to deflect fear, anxiety and responsibility, while, at the same time allowing us to maintain a necessary illusion to protect our fragile egos.
Are investors playing those same mind games now by hoping that the Coronavirus will not become an even larger problem, from both a health and economic perspective, in the future? The $64,000 question is, are investors in a mental state of denial?

Judging by both the health and economic headlines, we would have to answer that question with a resounding and emphatic YES!
The markets are not a matter of life and death. There will always be another day tomorrow. Only death is permanent. C'est la vie.
However, experiencing something as raw as the primal-like fear of death could dramatically affect people's overall mental well-being and their ability to process information and make cogent decisions.
Primal-like fear would likely create the associated primal urge to immediately protect oneself, other tribe (family) members, and everything that one values.
We all should understand that when a fight or flight mentality takes hold, people tend act first and then re-assess the situation they are facing later. It's akin to the saying "Shoot first and ask questions later".
That assessment of what things are most important may also contribute to a change in the prioritization of our lives, our ethics, our personal relationships and our financial situation.
Primal-like fear could have an unintended and possibly unexpected effect on the human psyche, and, hence investor behavior. If you factor in the possibility of such primal-like fear turning into a crowd mentality, you can understand how quickly a major panic could set in.
We are willing to bet that, after the past few days there are more than a few Crude Oil traders who know what primal-like fear feels like.
Don't think that a drop of that magnitude could happen in the equity markets? It could, even despite the 7%, 13% and 20% circuit breakers. Primal-like fear is just that strong.
The rush for something as simple as toilet paper has already caused massive panic among consumers; resulting in sudden uncontrollable fear or anxiety, which then can lead to wildly unthinking and irrational behavior, such as hoarding. And that's just one of many possible items that could be impacted.
What about money? Could we see a sudden rush by the panicked masses for cash, which in turn could lead to the hoarding of money? Some would say that we have already seen that happen when just about every liquid asset was sold in the March meltdown.

The March mini-crash was driven by mostly external factors. There was a sudden need for liquidity, driven by the decoupling of global markets. The corresponding fallout that resulted, caused massive selling in just about every asset class, including safe-haven precious metals.
The financial system was already beginning to show signs of stress as early as last November/December when the repo-market began to exhibit some very strange behavior. That, for us, was the proverbial canary in the coalmine.
Both consumers and investors seem to be either immune or ignorant to what the potential impact of experiencing societal primal-like fear could be. Suffice to say that what we have seen so far, could become much, much worse.
We are already seeing the economic effects of the first wave of the pandemic on things like unemployment, consumer confidence, and a host of other economic indicators.
The global economy has experienced an unexpected short-term shock that will unfortunately result in long-term economic consequences. The impact that these changes will have in the underlying structure of the global economy cannot be magically fixed by any amount of central bank intervention. In fact, such Modern Monetary Policy initiatives will ultimately create another, more severe set of problems.
So, what could things possibly look like for society and stock market investors if the unimaginable happens?

What if history were to repeat itself and we are once again faced with a situation like the Pandemic of 1918?
Don't think that it could happen? Think again.
“There are only patterns, patterns on top of patterns, patterns that affect other patterns. Patterns hidden by patterns. Patterns within patterns. If you watch close, history does nothing but repeat itself. What we call chaos is just patterns we haven't recognized. What we call random is just patterns we can't decipher. what we can't understand we call nonsense. What we can't read we call gibberish. There is no free will. There are no variables.” 
~ Chuck Palahniuk 

“That is the key to history. Terrific energy is expended - civilizations are built up - excellent institutions devised; but each time something goes wrong. Some fatal flaw always brings the selfish and the cruel people to the top and it all slides back into misery and ruin.” 
~ C. S. Lewis
Please understand, this is not intended to be alarmist, but simply to offer information in preparation for a scenario which may, or may not, happen. As the saying goes: "Be prepared for the worst and hope for the best".


Our belief is that even without a second wave of COVID-19, the stock market has not yet reached a bottom. The colossal collapse of oil prices, and the reverberations across entire economies should ensure that a new bottom will be made in the stock market. If we were to experience a second wave of the Coronavirus, we believe that the subsequent market sell-off would certainly be accompanied by a much lower bottom in stock prices.
Putting the Coronavirus aside, and, instead, turning to recent economic headlines, here we see a baker's dozen of news regarding the economy and business indicators:
This certainly doesn't look like the set-up for a "V"-shaped recovery to us.
We mentioned that falling oil prices could be the next catalyst for a swift move down in stock prices.

The carnage from this unexpected and historical drop in the price of crude may have just begun in earnest, as the price of Canadian oil just turned negative, as Goldman Sachs predicted three weeks ago.

Some may counter with the argument that the markets are a discounting mechanism; that investors look forward, not backwards. That is true, but the economy and business environment that we see ahead in no way justifies stock prices being anywhere near their current levels; 24,242 for the Dow-Jones Industrial Average and 2875 for the S&P 500, as of the April 17, 2020 close.
Consumer spending accounts for roughly two-thirds of GDP. Areas such as dining out, leisure activities, air travel, vacations, buying cars, home improvements, and spending on non-essential items ARE NOT likely to return to pre-Coronavirus levels anytime soon even if the "all-clear" is given to people currently locked down and sheltering-in-place.
Why? Because the consumer is going to hoard every last dollar that they can get their hands on. The consumer spending spree is over. As a country, we have been living beyond our means for years; racking up debt on credit cards, refinancing homes, buying automobiles with cheap loans, etc.

Do you really think that with all of the uncertainty surrounding this pandemic, and the huge amount of consumer debt that has been built up over the years, that people going to be as frivolous with money as they once were? We think not.

And, as if the debt-bomb isn’t bad enough, many Americans are now paying their rent by credit card.

People are going to retreat into a mindset of austerity. They would rather keep their money to ensure that they can pay the rent/mortgage, utility bills, keep their cell phones working, buy food etc. Most likely, even spending on clothes will not be viewed as essential.
Consumers are going to become misers; pinching every penny because they don't know how long this virus will last, and more importantly if the money the government is providing will continue and for how long?
Remember during the banking crisis of 2008-09 how TARP money was being hoarded by the big banks, when the government was pushing for them to loan the money out to stimulate the economy.

The same thing is happening now, but it is the consumer, not the big banks, that will be holding on tightly to any money that comes their way.
Whether, or not, there is a second wave, we are about to see a steep decline in consumer spending in this country, and it is likely to last for a very long time. The impact that will have on GDP, corporate earnings, and stock valuation levels will be devastating.
To add to that, the one primary reason for stock prices reaching new highs almost without interruption during the 11-year bull market was the effect of corporate stock buybacks. These massive buyback programs were the proverbial floor underneath the stock market.
That floor underneath stock prices no longer exists, and sellers are going to have to find another source of buyers to make up for the demand for equities. But who will that be? The Fed? Perhaps, but even then, it would take such massive amounts of money that it would surely cause the collapse of the U.S. dollar.
Why do you think that the demand for physical gold and silver has been so overwhelming?

Because the dollar will eventually be dethroned as the world's reserve currency. The printing presses over at the Treasury are running at full steam and there doesn't appear to be any let-up on the horizon.
We hate to say it, but the writing is on the wall. We are not going back to any sort of normalcy in society or the economy for a long, long time. You can't just hit the light switch and expect everything to become bright again.
The impact of this shock will be felt for years to come, and the current damage done to the economy and corporate earnings will take years to heal.
Unfortunately, buyers of equities today who think that there will be a "V" shaped recovery are simply not being realistic, are still living in the past, and are trying to revive a dead bull. The "Buy The Dip" mentality will prove extremely painful to those who are chasing overvalued stock prices.
The Fed is simply kicking the can down the road once again; fearful of destroying the "wealth effect". It is the illusion that they need so badly to maintain in order to keep this house of cards they have created from collapsing.

The worst consequence of the actions by the Fed with all of this ZIRP and QE has been forcing those retired senior citizens who used to buy CDs and money-market funds, because they were safe, into risk assets such as closed-end funds, mREITs, Midstream LPs, BDCs, etc. because they were literally starved for yield. Many of those high-yield investment alternatives are not only down anywhere from 30-80% in price, but many have also drastically slashed or eliminated their dividend payouts.
Just take a look at NRZ, a perceived safe mortgage REIT. The shares are down to $5.75 from a record-high price of $17.66 just two months ago. It got as low as $2.91 before the recent rebound.

That's a loss of some 67% in value. Add to that the reduction in the dividend from 50 cents to 5 cents.

That's a 90% reduction in dividend income. And that is just ONE OF MANY of the horror stories that conservative investors have been subject to. All because the Fed has forced people, who have no business investing in equities, to chase yield.
Will those who have seen their retirement portfolios decimated in the span of less than two months be spending any money in the U.S. economy? We all know that they no longer have the money to spend that they once did, so the answer is a resounding NO.

Many similar-type investments are in shambles along with the portfolios of those investors who had to make the difficult decision to abandon the safe-haven of CDs and money-market funds to generate some level of spendable income.
Yet, many investors, so much like Pavlov's dog, are salivating every time stock prices retreat.

They cannot shake the behavioral urge to step up and "buy the dip". This dip may, without notice, turn into a dump at the slightest sign of a second wave of COVID-19 as some countries are beginning to experience.
Investor's responses have become so conditioned to any market decline, irrespective of the severity, that they simply view it as another opportunity to pile into equities. This type of behavioral conditioning, which triggers an almost automatic buying impulse, is especially dangerous in today's environment.
Complacency has once again returned to Wall Street, as the market rally has softened fears of economic fallout from the pandemic. Like the Sirens in Greek Mythology whose sweet music lulled normally vigilant and cautious navigators to throw caution to the wind, so stock market investors appear to be doing the same.
Don't think that investors are complacent? Here is a smattering of comments posted to recent bearish articles on Seeking Alpha.

We could literally post hundreds more:
"Next leg down" ???? I guess I missed it, but did we have a first leg down? Buy the dip.
March 20 was the bottom of this cycle for the foreseeable future. We will not see those levels again unless we have WW3.
Well technically the bear market is already over. Shortest in history.
It wasn't really a bear market. We just had a correction and the bull market is still intact as I've been saying for weeks.
Doesn't matter man. Just hush and keep investing
Only 50%? You should be 100% in equities. Where's your conviction?

These dangerous Sirens, whose charming music and angelic singing voices caused many innocent victims to shipwreck on the rocky coast of their island, perhaps have returned; this time to the canyons of Wall Street, to lure unsuspecting investors with a similar bewitching appeal.
Many investors are saying that "the bottom is in".

But is it?
We don't believe that it is. Bear market rallies are historically the most vicious types of stock market rally. These rip-your-face-off, short-term spikes, in price typically are fueled by massive short-covering. They generally last a day or two before the trend of lower stock prices continues.
Since the market low reached on March 23, 2020, we have seen an approximate 30% rebound in stock prices. We expect this rally to soon falter as the news cycle turns to new concerns about a COVID-19 resurgence.
It was interesting to hear the talking heads on CNBC all-throughout the market decline emphasizing how orderly the selling was. Bottoms are rarely made in the midst of "orderly selling". They end with frenzied selling, deer-in-the-headlights type fear and capitulation. We have seen none of that so far.

So, while some people choose to ignore the social guidelines that have been issued related to public health, taking no heed of the dangers to both themselves and others, we wonder what it would take to shake them out of this attitude of complacency?
We wonder the same thing, as it relates to stock market investors. Would a sudden resurgence of the COVID-19 Pandemic be enough to trigger a change in market psychology and force investors to take their heads out of the sand?
Forget about fundamentals. Forget about the Fed. Forget just about everything that you think you know about markets. Primal-like fear, should it take hold, could turn the financial world upside down and inside out.
In such a case, expect a wholesale dumping of equities to a degree never seen before. Thus far, we have triggered the 7% circuit breaker on the NYSE four times. We never got to the 13% or 20% level, which would trigger additional trading halts.

Ordinary fear is nothing compared to Primal-like fear. The fear that was felt during the March meltdown in stock prices took place against a backdrop of a BTD mentality. Frightening, nonetheless, but a far cry from actual primal-like fear.
Take away that Buy-the-dip mindset and the accompanying urge to buy stocks, no matter what, and you have set the stage for a much different kind of fear that will grab hold of investors, and may result in the most panic seen in the stock market since October 19, 1987, when the Dow-Jones Industrial Average fell 22.6% in one day.
As we said earlier in this article, history oftentimes repeats itself.
Bear markets don't end on a buy the dip mentality. They end when wide-ranging complacency turns into outright boot-shaking fear. We are far from seeing anything near resembling a sick-to-the-stomach, gut-wrenching anxiety that causes panicked investors to literally puke up their stocks in a total, desperate act of capitulation. When that finally happens, the bottom will be in; not until then.

In summary, the three major dynamics that we believe will lead to another meaningful leg down in the major U.S. stock market averages are:
  1. The possibility of a second wave of the Coronavirus appearing in the early autumn months of 2020, thus causing further unanticipated business stress in the U.S. economy as a result of a Primal-fear response by investors.
  2. The consequences of a continuing demand-shock for crude oil around the world, resulting in many oil businesses to become insolvent.
  3. A deterioration in China- U.S. relations, which could negatively impact the prospects for global trade between the world’s two largest economies.
By the way, for those of you who think that you can simply ignore all of the bad economic news and the negative impact of COVID-19 on the global economy, due to the fact that the Federal Reserve will throw as much money at this problem that they need to rescue markets, think again.

As was pointed out by One River Asset Management Founder Eric Peters, in a recent interview:
Whether or not the central bank's decision is setting us up for an even more dramatic reversal later on no longer seems like a matter of speculation. The rapidity with which the market unraveled in March - erasing three years' worth of artificially inflated gains in three weeks - is evidence of what happens when artificial supports finally give way, leaving chaos in their wake.

Japan has already tried this strategy, and it has failed miserably.
Oh well, live by the Fed, die by the Fed.

Fedspeak Cheat Sheet: What Fed Officials Said Ahead of Their April Meeting

By Michael S. Derby

The coronavirus pandemic has prevented Federal Reserve officials from giving in-person public speeches since their emergency meeting March 15, but they still have had plenty to say about the health crisis and its economic impact online and in phone interviews.
Central bankers in recent weeks said their extraordinary efforts to provide liquidity have helped restore financial-sector functioning, but added getting the economy back on track will take time and is ultimately up to how the pandemic plays out.
Here is a roundup of Fed officials' comments before they meet Tuesday and Wednesday to deliberate on their next steps.
Chairman Jerome Powell (voter)

April 9, Brookings Instituion webcast

“We think our monetary policy is just in the right place...The principal focus now is not on adjusting what we see is quite an appropriate stance of monetary policy, at least for the next few months. The principal focus is on these lending programs and making sure that that credit does flow in the economy.”

Vice Chairman Richard Clarida (voter)

April 13, Bloomberg TV

Fed efforts to support the economy are “an ambitious and entirely appropriate and aggressive and forceful use of monetary policy in these times.”
Vice Chairman for Supervision Randal Quarles (voter)

April 10, video appearance

“Given the nature of this shock, there is every reason to believe that we come out on the other side of this with an economy that is essentially on par” and “can be revived without permanent damage.”
Governor Lael Brainard (voter)
No public comments.
Governor Michelle Bowman (voter)
No public comments
Boston Fed President Eric Rosengren

April 1, WSJ interview

“The economic outcomes—and that’s why forecasting is so difficult right now—are very, very dependent on the public health outcomes. How effective we are at getting treatments, how effective we are at social distancing, how effective we are getting people tested.”


New York Fed President John Williams (voter)

April 16, Economic Club of New York video appearance

“Even as a pandemic passes through and the economy comes back, I expect demand to be weak and therefore needing strong monetary support—fiscal policy support as well—to get our economy back to full strength over the next couple of years.”
Philadelphia Fed President Patrick Harker (voter)

April 17, Yahoo Finance interview

“I’m not a fan of the V-shaped recovery. I don’t think it will be that V. But the goal is to make a U, but a very narrow U.”
Cleveland Fed President Loretta Mester (voter)

April 17, Bloomberg TV

“This is a hugely impactful and negatively impactful shock, and we have to do all we can to make sure we are not doing permanent damage to the underlying fundamentals of the economy.”
Richmond Fed President Thomas Barkin

April 14, Yahoo Finance interview

“We took rates to zero, and hopefully that’ll help stimulate some amount of investment, both on the consumer and business side when we get through this health crisis.”
Atlanta Fed President Raphael Bostic

March 27, WSJ interview

“We’re still monitoring and if more needs to happen, we stand ready to do more.”


Chicago Fed President Charles Evans

April 8, Economic Club of Chicago video appearance

“Even under a best-case scenario, the U.S. and global economy will be less prosperous coming out of this crisis than we were going into it...We are all using valuable resources and savings that we had intended to use for other aspirations” and to ensure that the trouble isn't longer lasting, “it seems likely that additional resources will be required to navigate through the next several months and beyond.”
St. Louis Fed President James Bullard

April 17, video presentation

The Fed has made “substantial progress” in fixing financial markets and “is certainly willing to do much more” if it sees a need. 


Minneapolis Fed President Neel Kashkari (voter)

March 22, "60 Minutes" interview

“Whether it’s health-care policy makers, fiscal policy makers, which means Congress or the Federal Reserve, we should all be erring on the side of overreacting to try to avoid the worst economic outcomes.”
Kansas City Fed President Esther George
No public comments
Dallas Fed President Robert Kaplan (voter)

April 7, WSJ interview

Markets “appear to be functioning reasonably well, but I will tell you are we are continuing at the Fed to monitor them very, very closely. And when we see pockets where there appears to be issues, we will be prepared to act. But clearly, we’ve got dramatic improvement in the functioning of financial markets today—from where we were two weeks ago, certainly.”
San Francisco Fed President Mary Daly
April 15, WSJ interview
“I don’t expect a sharp V-shaped recovery. I expect something more like negative quarters of growth throughout 2020, and then a gradual return to positive growth in 2021.”