Stocks pared overnight losses after Fed goes “all in” again. Stocks reversed big losses overnight in the futures market after initial disappointment that policymakers in Washington, DC, could not reach an agreement on a stimulus deal on Sunday night was followed by more central bank support.
The Senate proposal is reportedly in the $1.5 trillion range in size and our sources in Washington suggest passage today is very likely, despite several members of the Senate being in quarantine and one, Senator Rand Paul of Kentucky, having contracted the illness. The agreement, combined with the Federal Reserve’s (Fed) shock and awe response this morning (more below) will help cushion the blow of the oncoming recession.Many jobs will unfortunately be lost during this crisis, but these efforts may save some.
Fiscal policy bazooka is on the way. We don’t know the specifics of the package, but we do know it will represent roughly 6% of US gross domestic product and will include direct payments and tax relief for consumers and a substantial lending facility backed by the US Treasury to help cushion the blow for impacted businesses. The failure of the Senate’s procedural vote followed the typical path of these negotiations and may lead to more compromises today, including more worker protection clauses and more restrictions on loans initiated by the Treasury. We will discuss today on the LPL Research blog.
Fed not out of ammunition just yet. The Fed this morning announced open-ended asset purchases in a historic aggressive attempt to mitigate disruptions in financial markets and re-establish free flow of credit to consumers, businesses, and state and local governments. The first piece of today’s new policy response from the Fed, essentially “QE infinity,” will enable the central bank to buy as many securities as needed to stabilize those markets. The next phase, which will accompany the stimulus working its way through Congress, will provide a Main Street lending facility to help preserve as many jobs as possible over the next 60 to 90 days as the crisis plays out.
What is a circuit breaker? Multiple times over the past two weeks investors have been greeted with something they haven’t seen in years, a circuit breaker. In the simplest since, this is a pause in trading after a significant drop in the stock market. We examine this new development more in detail Circuit Breakers Explained.
Recently, you may have seen reports that a record-low number of homes are available for sale—roughly 1.03 million nationwide. If you compare that to the average number of homes for sale during the past 10 years, it’s no surprise that many hopeful homebuyers are having issues securing a home. But why exactly is the housing … Continue reading “Forces Driving the Housing Market”
It can be exhausting trying to keep up with the whims of Wall Street. Lately, the financial markets have been fixated on federal taxes and what may be proposed on Capitol Hill in the weeks and months ahead. Wall Street’s focus on taxes closely follows its attention on the 10-year Treasury yield. And it wasn’t … Continue reading “The Whims of Wall Street”
President Joe Biden introduced the much-anticipated American Jobs Plan, which outlines an approach to spend roughly $2.2 trillion on the nation’s infrastructure and other projects. As part of the legislative process, the Biden administration also laid out a proposal for paying for the domestic investment. The plan includes raising the corporate tax rate to 28% … Continue reading “Paying for the Infrastructure Bill”
Financially, many of us associate the spring with taxes – but we should also associate December with important IRA deadlines. This year, like 2020, will see a few changes and distinctions. December 31, 2021, is the deadline to take your Required Minimum Distribution (RMD) from certain individual retirement accounts.
There’s an old Wall Street maxim that says, “markets climb a wall of worry.” And these days, there’s plenty to worry about with the trend in long-term interest rates and bonds.
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