What does the Fed think?
Well, at least we'll find out what they WERE thinking on Sunday, March 15th (emergency meeting), just as the virus was starting to shut down the US Economy. At the time, the Fed said: "The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States. Global financial conditions have also been significantly affected. Available economic data show that the U.S. economy came into this challenging period on a strong footing. Information received since the Federal Open Market Committee met in January indicates that the labor market remained strong through February and economic activity rose at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending rose at a moderate pace, business fixed investment and exports remained weak. More recently, the energy sector has come under stress" and they lowered rates 0.5% to essentially zero.
Until the Nobel Prize Committee recognizes my "Microwave Oven Theory of Behavior" I won't be considered one of the World's leading Economorons but this group of Economorons seems particularly clueless, don't they? I mean, it was an EMERGENCY meeting and the Fed had already promised $1.5Tn in QE funding on Friday, the 13th and the market went limit down on that news. As I said that morning:
"Pouring more money on the fire is not going to make the virus go away and won't dampen the economic impact of the virus. It's like giving everyone on the Titanic one Million Dollars and a bucket and claiming you "saved" them. It's what people who aren't actually able to fix things do to buy time (and votes) but it accomplishes nothing in the end – we need to do better!
"So we will sit back today and see what kind of bounce we get from the Fed's action and whatever BS the Government spins out today but none of it matters – even if we move up over 10% to the Strong Bounce line because that then brings us into the weekend, where things could get worse or better – it's a coin