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Date: 2024-07-14 Page is: DBtxt003.php txt00018460

Markets Plunge. Economies Stall. Panic Spreads. It All Feels Very 2008. Ineffective monetary policy, scant action from governments, and fear of a leadership void is raising alarm about the pandemic’s economic shock.

Burgess COMMENTARY

Peter Burgess
LIVE UPDATES Stocks Rebound From Historic Plunge: Live Market Updates RIGHT NOWPresident Trump today will declare a national emergency, a senior administration official says. Here’s what you need to know:
  • Stocks climb as investors see glimmers of government action.
  • The Fed will inject more liquidity into the Treasury market.
  • Mnuchin says U.S. in ‘second inning’ of stimulus efforts.
  • A split in Congress: Who should be paid not to work?
  • China makes the masks the world needs, and it’s starting to share.
  • Stocks climb as investors see glimmers of government action.
Stock rose Friday, rebounding from their worst day in more than 30 years, with gains that were pinned partly to signs of movement in Washington and a pledge by leaders in Germany to spend heavily to support Europe’s largest economy. The S&P 500 was up about 4 percent in early afternoon trading. In Europe, major indexes surged as much as 10 percent early in the day before losing steam as the week ended. Financial markets have been nothing if not inconsistent for the past three weeks, plunging and then rising, and then plunging again, as each day brought new measures to contain the outbreak and new worries that the economy, workers and businesses would take a hit as a result of them. ImageInvestor nervousness persisted on Friday and an early rally on Wall Street faded. Investor nervousness persisted on Friday and an early rally on Wall Street faded.Credit...Lucas Jackson/Reuters On Thursday, stocks on Wall Street and in Europe plunged in their biggest daily drop since the stock market crashed in 1987, as President Trump’s ban on the entry to the United States from most European countries disappointed investors, who had been waiting for Washington to take stronger steps to bolster the economy. ADVERTISEMENT Continue reading the main story House Speaker Nancy Pelosi said late Thursday that she and Treasury Secretary Steven Mnuchin had “resolved most of our differences” on a package of economic aid for workers and companies. On Friday, when Ms. Pelosi spoke about the bill, she highlighted that it would fund testing programs to determine the scope of the outbreak but didn’t address whether it had bipartisan support or buy-in from the White House. President Trump is expected to declare a national emergency at a news conference scheduled for 3 p.m. on Friday, a move that would give him authority to use $40 billion of disaster relief funds to address the crisis. And on Friday, Germany’s government said that it would make more than $600 billion available to help companies there, while France pledged to unleash tens of billions of euros to prevent a potential jump in unemployment by paying small and medium-size businesses slammed by the epidemic to keep workers on furlough. Olaf Scholz, the German finance minister, said that his government could take further steps, including taking stakes in companies, if deemed necessary. “We can’t forget the lessons of the previous financial crisis,” Mr. Scholz told reporters in Berlin. ADVERTISEMENT Continue reading the main story The volatility in markets this week reflects the increasing concern that governments and central banks may not be able to meaningfully mitigate the economic fallout from the spreading coronavirus. Get an informed guide to the global outbreak with our daily coronavirus newsletter. But to some investors, the recent slide has presented opportunities to start finding bargains. “We’re combing through the wreckage,” said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management. “We’re looking at this as an opportunity to take advantage of absolute carnage in markets.” LIVE UPDATESRead the latest on the battle against the coronavirus. The Fed will inject more liquidity into the Treasury market. Image Swift action by the Federal Reserve Bank of New York suggested to some investors that there could be more to come. Swift action by the Federal Reserve Bank of New York suggested to some investors that there could be more to come. Credit...George Etheredge for The New York Times The Federal Reserve Bank of New York is buying up a variety of Treasury securities in a bid to keep markets functioning normally after trading in government debt broke down earlier this week — and that effort to help became even more substantial on Friday. The bank said it would pull forward its planned monthly purchases, which total $80 billion, so that half of them would be done by the end of the day. It would also “bring forward remaining purchases for this monthly calendar and adjust terms of operations as needed to foster smooth Treasury market functioning,” it said in a statement. The swift action suggested to some investors that there could be more to come, and stock prices rallied on the back of the announcement. ADVERTISEMENT Continue reading the main story “It’s a signal that they are diagnosing what it going on in the market,” said Julia Coronado, founder of MacroPolicy Perspectives. “It’s a signal that we’re likely to get quantitative easing next week, if not before.” But just as the Fed was pulling out the stops, President Trump was tweeting about the central bank’s inaction. “The Federal Reserve must FINALLY lower the Fed Rate to something comparable to their competitor Central Banks,” he wrote. “Jay Powell and group are putting us at a decided economic & physiological disadvantage.” The Fed was ahead of its global counterparts in reacting to the coronavirus’s economic threat, slashing rates by half a percentage point last week in its first emergency move since the financial crisis. It is widely expected to lower rates again at its meeting next week, and analysts think it could revive more aggressive bond-buying, among other measures meant to cushion the market and real-economy fallout of the global pandemic. Mnuchin says U.S. in ‘second inning’ of stimulus efforts. Image Treasury Secretary Steven Mnuchin said that the economic relief package being negotiated with Congress was just the beginning of efforts to stimulate the economy. Treasury Secretary Steven Mnuchin said that the economic relief package being negotiated with Congress was just the beginning of efforts to stimulate the economy.Credit...Erin Schaff/The New York Times Treasury Secretary Steven Mnuchin vowed on Friday that the United States government would do whatever was necessary to ensure that markets have “almost unlimited” liquidity. He said that the economic relief package being negotiated with Congress was just the beginning of efforts to stimulate the economy in the wake of the coronavirus. “I think we’re like in the second inning of getting things done,” Mr. Mnuchin said on CNBC. The Trump administration is considering additional relief measures, including a payroll tax holiday. Mr. Mnuchin also said that the administration is working on exemptions from tariffs imposed by President Trump that are affecting businesses, and that he would be open to waiving restrictions on withdrawals for 401(k) investments so that people can more readily access their savings. ADVERTISEMENT Continue reading the main story The Treasury secretary dismissed rumors that markets could shut down because of the recent volatility, and he encouraged banks to turn to the Federal Reserve’s discount window for funding if needed. Mr. Mnuchin expressed optimism that the current “black swan” period would be over in a matter of months, and pent-up demand would jump-start the economy. A split in Congress: Who should be paid not to work? A fundamental divide over how many Americans should be paid to stay home from work amid the coronavirus outbreak has emerged as one snag in negotiations over a multibillion-dollar federal response to the mounting health and economic damage from the virus. House Democrats are set to vote Friday on a bill, negotiated with Treasury Secretary Steven Mnuchin, that includes several measures meant to combat the spread of the virus and cushion its economic shock to the economy. One of those is a plan to provide paid leave to workers affected by the virus. A key question is how many workers should be covered by that leave plan, which would ensure compensation for people who do not go to work during the outbreak. Many Republicans want to keep it focused narrowly to workers who have contracted the virus or are forced to care for sick family members or children whose schools have closed — and they are concerned that the bill, more broadly written, could also encourage healthy people to stay home, thus chilling economic activity. Many Democrats say legislation should go further, and protect workers from being forced to expose themselves to the virus. Image A market in Beijing. China’s economy was already struggling with its slowest growth in nearly three decades before the coronavirus hit. A market in Beijing. China’s economy was already struggling with its slowest growth in nearly three decades before the coronavirus hit.Credit...Roman Pilipey/EPA, via Shutterstock ADVERTISEMENT Continue reading the main story China makes the masks the world needs, and it’s starting to share. With the United States struggling to meet coronavirus testing demands, China, which appears to have made progress managing the outbreak, has tried to become a resource for other nations. On Friday, the Jack Ma Foundation and Alibaba Foundation said they would donate 500,000 testing kits and one million masks to the United States to help it deal with the pandemic. Alibaba is China’s biggest online retailer, and Mr. Ma is the company’s co-founder and former executive chairman. “Drawing from my own country’s experience, speedy and accurate testing and adequate personal protective equipment for medical professionals are most effective in preventing the spread of the virus,” Mr. Ma said in a statement. Mr. Ma said that the two foundations had, in recent weeks, also donated similar resources to Japan, Korea, Italy, Iran and Spain. MASK MAKERSMore about what’s happening with mask’s made in China. Here’s what else is happening. Berkshire Hathaway said it would not allow shareholders to physically attend its May 2 annual meeting in Omaha, Neb., which will be streamed online. All special events around the meeting were canceled. Airbnb updated its “extenuating circumstances” policy on Friday, making it easier to get a refund. Customers with reservations in the United States, mainland China, South Korea or Italy can cancel bookings through the beginning of April free of charge. Wynn Resorts is canceling all large entertainment gatherings from this weekend, including buffets, nightclubs and theaters in Las Vegas and Boston. The company said it would continue to pay its full-time employees. The People’s Bank of China said it would inject $79 billion into its financial system, in a move that indicated Beijing remained concerned about its domestic economy after weeks of virtual shutdown. The travel and tourism industries could lose up to 50 million jobs as the coronavirus pandemic saps demand for their services, the World Travel and Tourism Council said on Friday. To preserve jobs, the group said governments should remove barriers to travel, cut taxes, provide incentives and support promotional campaigns. American consumers were slightly less confident in early March compared with a month ago, according to the latest University of Michigan consumer confidence index, reflecting early fears about the spread of coronavirus and its impact on the stock market. The index fell to 95.9 in March, which the survey described as a “modest decline” from 101.0 in February. Reporting was contributed by Alexandra Stevenson, Jeanna Smialek, Niraj Chokshi, Jim Tankersley, Cao Li, Amie Tsang, Carlos Tejada, Brooks Barnes, Mohammed Hadi and Katie Robertson. THE OUTBREAK’S IMPACT Markets Plunge. Economies Stall. Panic Spreads. It All Feels Very 2008.March 13, 2020 What You Need to Know About Trump’s European Travel BanMarch 12, 2020 Trump’s Payroll Tax Cut Would Dwarf the 2008 Bank BailoutMarch 12, 2020 READ 423 COMMENTS he Coronavirus Outbreak Answers to your most common questions: Updated March 13, 2020 What is a coronavirus? It is a novel virus named for the crownlike spikes that protrude from its surface. The coronavirus can infect both animals and people and can cause a range of respiratory illnesses from the common cold to lung lesions and pneumonia. How contagious is the virus? It seems to spread very easily from person to person, especially in homes, hospitals and other confined spaces. The pathogen can travel through the air, enveloped in tiny respiratory droplets that are produced when a sick person breathes, talks, coughs or sneezes. Where has the virus spread? The virus, which originated in Wuhan, China, has sickened more than 137,300 in at least 113 countries and more than 5,000 have died. The spread has slowed in China but is gaining speed in Europe and the United States. World Health Organization officials said the outbreak qualifies as a pandemic. What symptoms should I look out for? Symptoms, which can take between two to 14 days to appear, include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Milder cases may resemble the flu or a bad cold, but people may be able to pass on the virus even before they develop symptoms. How do I keep myself and others safe? Washing your hands frequently is the most important thing you can do, along with staying at home when you’re sick and avoiding touching your face. How can I prepare for a possible outbreak? Keep a 30-day supply of essential medicines. Get a flu shot. Have essential household items on hand. Have a support system in place for elderly family members. What if I’m traveling? The State Department has issued a global Level 3 health advisory telling United States citizens to “reconsider travel” to all countries because of the worldwide effects of the coronavirus. This is the department’s second-highest advisory. How long will it take to develop a treatment or vaccine? Several drugs are being tested, and some initial findings are expected soon. A vaccine to stop the spread is still at least a year away.
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