For the third time in two weeks, the New York Stock Exchange halted trading due to the circuit breaker of a 7% intra-day loss being breached. This comes after a sharply higher Friday trading session, another weekend of worsening headlines as it relates to the spread of the Coronavirus and significant action from the Federal Reserve and other global central banks.
Late in last Friday’s trading session, President Trump declared the Coronavirus pandemic a national emergency and announced a number of measures aimed at combatting Covid-19 and stemming the economic turmoil that has taken place over the last few weeks. The declaration opens up billions of dollars to help fight spread and Trump vowed a massive increase in the number of tests available as a result. Among other items, he announced a number of partnerships with the private sector. There’s a Google-led web portal for citizens to log their symptoms and arrange for testing if needed. Retailers such as Wal-Mart have also pledged to ramp up their supply chains in efforts to keep their shelves stocked as well as offering up portions of their stores’ parking lots for drive thru testing. Trump also announced large purchases of oil into the United States’ Strategic Petroleum Reserve in an attempt to stabilize oil prices and stockpile oil at low costs in case of supply issues in the future. Interest on all federally held student loans has been waived as well.
Over the weekend, the House passed an emergency Coronavirus bill. The bill includes free testing, expanded medical leave for small business employees (under 500 employees), paid sick leave and additional funding to state’s experience spikes in unemployment. Congressional committees are expected to work through this week’s regularly scheduled recess to continue examining what can be done to soften the health-related and economic impact of the virus.
Many states are announcing their own courses of actions. In the State of Illinois, Governor J.B. Pritzker announced that schools will be closed beginning on Tuesday. He has also announced that all restaurants and bars are to close for dine-in customers, allowing for only pick-up and delivery from these establishments.
The CDC has laid out stricter guidelines in terms of public gatherings, recommending the cancellation or postpone of events of over 50 people for the next 8 weeks. They also continue the efforts to flatten the curve by encouraging proper hygiene, social distancing and remote work when available. The Center will be releasing additional guidelines in a press conference this morning.
Sunday evening the Federal Reserve announced a 100 basis point cut to the Fed Funds Rate, bringing the overnight lending rate essentially to 0%. The statement also called for a new $700 billion round of Quantitative Easing in which the Fed will purchase $500 billion in Treasury securities and $200 billion in mortgage backed securities. It was also announced that there was coordinated action on the part of the Fed in conjunction with the central banks of Canada, England, Europe, Japan and Switzerland to enhance liquidity across the global financial system in this time of stress. This announcement was in addition to its emergency cut of 50 basis points on March 3rd and was done so ahead of and in lieu of the Federal Reserve’s regularly scheduled meeting this week.
Markets are still dealing with a great level of uncertainty as to how this public health crisis plays out economically. With the Federal Reserve having used a great deal of their available monetary measures, it will be up to the fiscal and health-related response to largely restore confidence in the markets. As always during turbulent times like this, the Investment Team at Old Second Wealth Management continues to monitor these situations closely and how they long term trajectory of the economy. Should you have any questions please reach out to your Relationship Manager or Investment Officer.
Rich Gartelmann, CFP® – (630) 844-5730 – firstname.lastname@example.org
Steve Meves, CFA® – (630) 801-2217 – email@example.com
Brad Johnson, CFA®, CFP® – (630) 906-5545 firstname.lastname@example.org
Mike Cava, CFA®, CFP® – (630) 281-4522 email@example.com
Mike Demski – (630) 966-2430 firstname.lastname@example.org
Jacqueline Runnberg, CFP® – (630) 966-2462 email@example.com
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