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Federal Reserve cuts rates to zero and launches massive $700B QE program

"The Federal Reserve, saying 'the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,' cut interest rates to near-zero on Sunday and launched a massive $700 billion quantitative easing program to shelter the economy from the effects of the virus."

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  • edited March 15
    I was not expecting the Fed to make such a large cut before the scheduled FOMC meeting next week nor was I expecting the launch of such a massive QE program. It will be interesting to see how markets react to this news tomorrow.
  • UP UP & AWAY !!!! My best guess !!
    Derf
  • Just dumb in my opinion. Isn't that pretty much the extent of their ammo?
  • edited March 15
    It's obvious that the coronavirus outbreak will have economic implications. How can the magnitude of the economic fallout be ascertained when so few in the U.S. have been tested for coronavirus?
  • edited March 15
    Smells like fear. And the White House briefing today is frightening.
  • Well, actual testing would involve a lot of that science stuff, and we're really not too keen on that line of thought. We actually are a lot more comfortable with faith-based, or even better, tweet-based statistics.
  • Dollar, Equity Futures Drop as Fed Slashes Rates (Bloomberg via Yahoo)
    https://finance.yahoo.com/news/yen-extends-gains-fed-slashes-210909833.html
    Futures on the S&P 500 fell 3.9%. The gauge advanced 9.3% on Friday.
    Also because, as @PRESSmUP put it, "Smells like fear."
  • edited March 15
    So what will happen to my bond funds now!?!? PRULX rocketed then last week dropped like a stone. Are they buying bonds with the QE?

    So, do you remember that scene in Casino Royale where Dimitrios pushed all his chips in and then drops the keys to the DB5 on the pile? Then 007 cleans his clock and asks for the valet ticket...

    Yeah, that's where we are now!
  • edited March 15
    Overheard in Washington: "Hrmm, that's not supposed to happen."

    Buckle up. folks....Asia opens soon. And we're already limit-down on the US futures.
    msf said:

    Dollar, Equity Futures Drop as Fed Slashes Rates (Bloomberg via Yahoo)
    https://finance.yahoo.com/news/yen-extends-gains-fed-slashes-210909833.html

    Futures on the S&P 500 fell 3.9%. The gauge advanced 9.3% on Friday.
    Also because, as @PRESSmUP put it, "Smells like fear."
  • edited March 15
    When I checked the S&P futures at Finvis Futures earlier today the S&P was showing up 8% & change. Now it's showing down about -5%. Obviously a convincing vote of confidence in today's performance by our brilliant executive branch tweetership.
  • Today...this afternoon...Trump declared that the corona virus is “something that we have total control over.”

    We have a serious leadership problem in this country. If Trump can't get his shit together, he needs to step aside.

  • Futs don't start pricing until 6 or 630PM ET. They were limit-down when I checked a few minutes ago.
    Old_Joe said:

    When I checked the S&P futures at Finvis Futures earlier today the S&P was showing up 8% & change. Now it's showing down about -5%. Obviously a convincing vote of confidence in today's performance by our brilliant executive branch tweetership.

  • edited March 15
    Oil getting clobbered too. Down more than 4%. CNBC live now, Sunday night with Powell. Implied DOW open is -1242.
  • They should have waited till Monday. THEN if they did it, might have stabliized the markets. Trump pullign the strings no doubt. Fed just used up the last Trump card. Pun intended
  • Howdy folks,

    PRESSemUp is spot on. Did you see the briefing. Now I'm scared. No rational investor can feel reassured. And as Mark pointed out, the Fed headed home to their bunkers - they have nothing left.

    Look out below. I am more fearful right now than I ever was in 20 months in Vietnam.

    Please, dear God, buckle up and prepare for the worst. Hopefully it won't come to pass but your preparation won't hurt.

    As LCpl Ford used to say every night while 'securing the troops', was "keep your asses low and your flak jackets close".

    And so it goes,

    Peace and Flatten the Curve

    Rono kopp
  • "Fear" for sure. Also this cut is on Sunday so that it stabilizes the market comes Monday morning.

    CNN this morning discussed that the Fed may purchase assets just like back in 2008 crisis. This includes bonds, stocks and ETFs!

    In 2008 the Fed bought only asset-backed bonds. https://federalreserve.gov/newsevents/speech/yellen20110108a.htm
    This is panicking.

    Messages coming from WH are childish:
    1. "don't buy so much. we have plenty" The basis of hoarding TP and other stuff stems from the lack of confidence from the government.

    2. "we have great control of spreading of the virus" - pure non-sense and US is 2 months behind to carry out the pandemic plan that Trump defund the White House Pandemic Office (part of the National Security Office). https://washingtonpost.com/outlook/nsc-pandemic-office-trump-closed/2020/03/13/a70de09c-6491-11ea-acca-80c22bbee96f_story.html

    Dr. Antony Faui of NIH spoke on CNN and deliver sound and clear messages of the situation.
  • edited March 15
    What a mess! Reputable medical professionals on-air today at least “broaching” the idea of a nation-wide lockdown. Doubt that will happen, but am working on getting a month or more ahead on prescription meds and food supplies because who in hell knows where we’re headed? Some states have already shut-down all bars & restaurants. Do they realize that a lot of hard working people support themselves and their families with these jobs?

    On the 0 rates ... wondering which fund houses will subsidize their money market funds at a loss, and which ones will just shut them down completely?

    @Sven - my reaction as well ... Poor Pence on TV this afternoon admonishing folks to “buy only one-week’s supply of groceries” when shopping. Sure dude. If he addressed the crap paper shortage I missed it. But if you don’t have any food to eat that should pretty much resolve the second issue.
  • rono said:

    Howdy folks,

    PRESSemUp is spot on. Did you see the briefing. Now I'm scared. No rational investor can feel reassured. And as Mark pointed out, the Fed headed home to their bunkers - they have nothing left.

    Look out below. I am more fearful right now than I ever was in 20 months in Vietnam.

    Please, dear God, buckle up and prepare for the worst. Hopefully it won't come to pass but your preparation won't hurt.

    As LCpl Ford used to say every night while 'securing the troops', was "keep your asses low and your flak jackets close".

    And so it goes,

    Peace and Flatten the Curve

    Rono kopp

    Get a grip already.
  • edited March 15
    Mark said:

    Just dumb in my opinion. Isn't that pretty much the extent of their ammo?

    The Fed has made it clear they will pull out all the stops to keep the expansion going (or alternatively to try to minimize the depth of a recession). Their metrics are not overly troubled by the current scope of the market inefficiences that have accompanied the Powell Put (including prolonging the lives of zombie corporations). What they did today does not surprise me. It is my understanding they have also been looking into other actions that can be taken that have not been utilized before. So, it will not surprise me to see additional novel actions taken in the near future. (A lot of what Bernanke and crew did during the Great Recession was considered novel at the time.) Also, if the markets react negatively in a sustained manner to what was done today, it will put additional pressure on Trump and congress to pass a large scale fiscal stimulus bill. Trump will want it to help him get reelected. The Democrats have a shopping list of items they want to get funded. And, I expect enough congressional Republicans will support whatever Trump wants to get something big passed.

    It will be interesting to see what happens when the markets open tomorrow. I am currently in Hawaii so that means getting up in time for the 3:30 AM HST open.....

  • “The Fed has made it clear they will pull out all the stops to keep the expansion going “

    Yup. The Bank of Japan’s been buying stocks to support the faltering stock market (and maybe some others), so don’t discount the ingenuity of this gang.
  • god forbid we have a sizable real financial problem, get hit by a meteor, or have a pandemic way more serious and untreatable
  • Mark said:

    Just dumb in my opinion. Isn't that pretty much the extent of their ammo?

    My thought, too.

  • @davfor Oahu? You're just in time for the flooding from the Kona Low. 4:30 p.m. and finally some sunshine here on the Windward side.
  • edited March 15
    @Starchild- @rono's "grip" is just fine, thank you, and has been for many years now.
  • edited March 15
    4:40 Hawaii Time. 10:40 in the East, Sunday night: CNBC: $700B stimulus will be all about Treasuries and MBS. The Fed dropped rates a full percent. Well....THIS is gonna suck like a Hoover. My look, just a moment ago: Futures down by -1041. "This American Carnage..." Remember those words from January, 2017? GWB listened with the other dignitaries and said afterwards: "Well, that was some weird shit." And it just keeps getting thicker. "Thicker than owl-shit." (-Kinky Friedman in "Highway Cafe.")
  • edited March 15
    rforno said:


    Futs don't start pricing until 6 or 630PM ET. They were limit-down when I checked a few minutes ago.

    Been limit-down all evening. Asia’s mostly deep red except Japan, which is slightly green.

    Gold’s been going wild for weeks. Up & down - but mostly down. My mining fund is off 33% YTD. Glad I own only a little. Same is true if oil - which tumbled from $70 a month or so ago to $30-$32 currently.
  • edited March 15
    Crash said:

    @davfor Oahu? You're just in time for the flooding from the Kona Low. 4:30 p.m. and finally some sunshine here on the Windward side.

    Molokai. East end condo. There has been a Flash Flood alert for the past 24 hours or so but the weather has been OK here today. The view is across the Paniolo Channel to Maui (Kapalu and the surrounding part of the island). We owned a condo on Molokai for about 15 years that we sold in 2015 or 2016 (I have never had what is commonly called a good memory). I have been missing the old Hawaii slowed down feeling of this island. So, I am here for a short stay....probably will be back for a longer period next winter. (We also lived in Kauai and built a house there during the mid-80's.) You are in Honolulu, yes?

    By the way, here are 2 Fed statements from today:

    https://federalreserve.gov/newsevents/pressreleases/monetary20200315a.htm

    https://federalreserve.gov/newsevents/pressreleases/monetary20200315c.htm

  • @davfor No, Kaneohe, here.:) I've not seen any of the other islands. Got here full-time just at the end of last October. The cousins here have relatives in Waimanalo, down by Makapu'u Point with the lighthouse. Fabulous spot. Great beach there, too: Waimanalo Beach. It's been a while, but I marveled at the view of the NW edge of Molokai from the southeastern corner of Oahu when we turned the corner from Hawaii Kai, in the car. I had not realized it was so close. It's a pity that they can't make a ferry work and turn a profit. Gotta fly between islands.
  • @crash Kaneohe sounds much better than Honolulu to me. Molokai is very rural with a population of under 8000 and only about an average of about 200 tourists here per day. There is a daily ferry between Molokai and Maui ( molokaiferry.com/ ). There are very limited employment opportunites here. Some people take the ferry daily to work in Maui. Its only about 10 miles to Maui from where I am currently staying.
  • Interesting. New information. Thanks for the reply.
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