The Countdown To The Recovery Has Begun
Zacks Investment Research | Mar 18, 2020 03:32AM ET
The bull market, one of the longest in history, had showed no signs of slowing last month. But within 4 short weeks, the coronavirus stopped it in its tracks.
The World Health Organization finally labeled the outbreak a pandemic last week. Interestingly, previous pandemics did not create such an economic disruption in the global economy. But with trade and supply chains so interconnected, and with the unprecedented containment response from countries and individuals that have impacted the flow of people, goods, and ultimately commerce, the economy has taken a hit.
For perspective, this is the fastest we’ve ever seen a bull market turn into a bear.
Let me also say that while bear markets typically coincide with recessions, that’s not always the case.
And this one might be another example of that.
Recession or not, the pain is real right now.
But it’s important to remember that our economy is strong, with 50-year low unemployment, 20-year high in household income, near record high in consumer confidence, and near record lows in interest rates.
It’s clear there’s going to be a negative economic impact. And nobody yet knows how severe it will be. But the U.S. was arguably in one of its strongest economic positions prior to this, which makes it all the more likely that we will bounce back in record time.
Nonetheless, the longer these disruptions last, the greater the impact will be.
In the meantime, the U.S. government is preparing several packages of aid and stimulus measures. That includes $50 billion in small business loans. And a proposal to send checks to those hardest hit by the crisis due to the closing of stores, restaurants, and other businesses as these temporary social distancing measures are enacted.
The Fed also swiftly cut interest rates twice already for a combined 150-basis point rate cut, bringing rates to near zero, while also injecting $1.5 trillion into our financial system to expand liquidity, and buying $700 billion worth of treasuries and mortgage-backed securities.
More . . .
------------------------------------------------------------------------------------------------------
Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.