Stimulus Deal on 5 Yard Line: Stocks Soar But Questions Remain

Mish

Stocks are flying this morning on news a stimulus deal is at hand.

The Wall Street Journal reports Negotiators Nearing Accord on U.S. Stimulus Package to Combat Coronavirus but specific details are still up in the air.

Top lawmakers and the Trump administration closed in on completing a colossal stimulus package, worth at least $1.6 trillion, designed to shield the U.S. economy from the most drastic consequences of the coronavirus pandemic. “I believe we’re on the 5-yard line,” said Senate Majority Leader Mitch McConnell (R., Ky.) on the Senate floor. “I hope today is the day this body will get it done.”

Treasury Secretary Steven Mnuchin, who has led the negotiations for Republicans, said on Tuesday morning that he expected a deal. He and Mr. Schumer completed a round of late-night talks Monday predicting they could soon finalize an agreement, which Mr. Schumer said could run to $2 trillion.

The two sides were approaching an agreement on one of the primary remaining sticking points: oversight on $500 billion that Republicans had proposed to allocate to aid distressed businesses. Democrats had sought controls on those funds, which include loans made directly by the Treasury Department and a backstop for losses in Federal Reserve lending facilities.

Stop the Nonsense

I agree with Trump on the nonsense.

So how many pages will there be to this bill, and what's on the pages?

Meanwhile, Wall Street loves the bailout, no matter what it is. THe DOW is up about 8% , with the Nasdaq up 5%, and the S&P 6.5%.

Gold is up another $87 to $1654.

Is Everybody Happy?

Not quite. especially the 5-year note. The 5-year yield is up 11 basis points to 0.51%. The 10-year note is is at 0.82% and the 30-year bond yield is 1.39% up 4 basis points.

Mike "Mish" Shedlock

Comments (45)
Zardoz
Zardoz

Look out below when everyone sees what's IN the bill....

No. 1-19
Ebowalker
Ebowalker

What is the breaking point with our debt? Does this finally end our ridiculous empire?

abend237-04
abend237-04

Widows and orphans cliff diving for yield...shades of David Stockman, complete with Congressional jabberwocky.
I'M not crazy; I'm NOT crazy; I'm not CRAZY. Maybe I'm crazy.

Realist
Realist

Many countries are following the same playbook. Steps are not in any particular order. Step 1: shut down the country as much as possible to reduce the spread of the virus. Step 2: provide support for individuals and businesses who are affected by the shutdown. Step 3: support and enhance the health care system to help them deal with this crisis. Step 4: enact special powers, as provided for, in each country, in order to make quick decisions without approval. Step 5: provide daily updates to the public in order to keep them informed. It is important to be honest and straightforward and not mislead the public in the updates. Providing accurate and timely information is crucial.

10 Replies

njbr
njbr

Not in USA!, USA!, USA!

Realist
Realist

Perhaps you are correct at the federal level. However, at the state and local level, I believe they are all following this playbook. Very impressed with Cuomo.

FromBrussels
FromBrussels

Step 6 : print more money out of the blue, to pay for the previous 5 steps....

Stuki
Stuki

lt's worse than that. Robbery by debasement; in order to pay for relief from certain, immediate mass death; while still the most destructive form of robbery, at least has an arguably noble goal.

But, as always: Instead, what the robbery is funding, is keeping alive zombies which was not sustainable even pre virus. Which neither served, nor will ever serve, any positive purpose whatsoever. And which only, 100%, destroys scarce capital. Solely in order to prevent the undifferentiated mass of leeches living off of the zombies, from having to "take a loss." By way of instead forcing the loss on everyone else, Including critical service personnel.

From health care workers (who will have access to fewer masks because Mnuchin's buddies can afford to hoard more of them), to cleaning personnel (who will have to pay an even greater chunk of meager incomes in usury rent to abject, idle, leeches doing nothing of value), to hospitals, medical researchers, transport workers ditto....

Everyone. Just to keep the illusion of the complete, 100%, all out failure marketed as "the ownership society," having a single positive facet to recommend it whatsoever, alive.

What "the economy", free markets, is screaming for, is shifting resources towards fighting the virus. Not maintaining jobs as ambulance chasers, banksters and other pointless, expendable garbage. As in, flush the leeches out, so they can no longer earn a living unless they deliver groceries and medicines to older people, walk up and down their neighborhoods disinfecting stuff, carry stretchers to ICUs and coffins to morgues etc.

All planes repurposed to deliver goods to locked down people. Not being hoarded by failed "airlines" with no job to do; simply so that leeches who lent them money don't have to "take a loss." They should take a loss. Big enough to end up being forced to walk up and down with a sprayer in exchange for food and water.

Etc., etc.

The America which existed pre virus was an unsustainable, largely undifferentiated dump. Massively, and by now obviously to anyone with a single functional braincell, worse than a bloody communist country, fer csakes. None of those who had prospered in it, did so on account of own talent nor effort. Al wealth was simply stolen from productive people on their behalf.

It was a pimple on the face of humanity. Diverting real resources from narrowly focusing on simply beating the virus, in order to keep that disgusting pile of excrement from collapsing the way it should have decades ago, is about as clear a demonstration of abject economic illiteracy as can be found anywhere.

rafterman
rafterman

Wow! You sound bitter.

killben
killben

Well said! One can only lament at the state of affairs..

Realist
Realist

I don’t think the states can print their own money.

TumblingDice
TumblingDice

@FromBrussels and @Stuki,
You guys sure are correct here.

I must confess that I am feeding at the "government trough". My Microsoft stock jumped today $12 (9.09 %) to $148. Back up 450% since I bought in 2012.

My first job out of college I was talking to a security guard at my company an his advice on the stock market was "not to invest money you can't afford to lose". I paid my house off years ago so I'm not levered up like Wall Street high rollers.

FromBrussels
FromBrussels

You re right of course as far as keeping 'zombie leeches' alive is concerned... But what is the alternative for kicking cans down Dead End Avenue? Cleansing the system, as you suggest, would be the right thing to do, like during the '29 depression....Global population though quadrupled! in just one century ! What is going to happen to almost 8 bln, many of which useless and handouts dependent , planet destructive leeches ? The alternative would be total ANARCHY, so I do hope the 'zombie economy' lasts my life time (20 years to go statistically speaking) Well if necessary I would give myself some 'help' when things get seriously out of hand ....

Herkie
Herkie

Stuki, you said: "It was a pimple on the face of humanity. Diverting real resources from narrowly focusing on simply beating the virus, in order to keep that disgusting pile of excrement from collapsing the way it should have decades ago, is about as clear a demonstration of abject economic illiteracy as can be found anywhere."

So, nice work if you can get it right?

Your frustration could not be more eloquent if you tried. How did everything get so fucked up? Well, I say the greedy leeches you speak of kept adding more and more ways to rip off labor and eventually so did government till they teamed up to maintain us as a slave race with just enough wages and benefits to keep us passive and no more. Social and financial mobility is at a human low point, even in ancient Rome manumission was far more common than in modern western capitalist nations. It is to the point that the lottery now gives you a better shot at real wealth than hard work. People no longer dream about getting rich through their own talent, effort, and genius, they now dream of winning the Powerball and not because they are bone idle either. It is because one in a million can achieve real wealth through great ideas and hard work.

One thing you said I started this reply about, SCARCE CAPITAL. That has to be considered an outmoded concept in an era of negative interest rates, zero reserve requirements, multi trillion dollar bailouts, and unlimited QE with a stated purpose of buying any assets that are "troubled."

But, you notice that all of the above are for current asset holders and not to make new ones, in other words it is to support the modern slavery paradigm and not to change it. Capital is not scarce anymore for our owners. May never be again.

All in all I am starting to think that that planet killing asteroid that is supposed to whisper past Earth in 2029 is actually going to hit us, because there is no other explanation for the way they are operating economies around the globe than they expect it all to end shortly. You do not have to worry about a sustainable future for 8 billion people if the population is going to dive by 99.99998% in a matter of a few years do you? All you have to do is increase the wealth of enough that they can find a way to survive the hit and rekindle reproduction.

njbr
njbr

Ahahaha..it's not about the stimulus--it's the low-info buy-the-dip see Trump pushing to restart the economy no later than China does (opening up Hubei and Wuhan in the next week or so). It's too boring for to continue on with the news conferences on the world's tiniest stage, it was a hoax anyway, it's time for a new story.

Maybe he can take up plate-twirling. Enjoy!

And, what about two weeks from now?

Tony Bennett
Tony Bennett

Buy the rumor, Sell the news?

How long after stimpack in rear view mirror before tantrums begin (again)?

Greggg
Greggg

Just keep one thing in mind.... There are far more horse's asses in Washington than there are horses.

Maximus_Minimus
Maximus_Minimus

Fire up the bubbles.

Stan88
Stan88

Trump will cave as usual. He'll sign any piece of garbage bill that lands on his desk.

Seb
Seb

Everyone wants to be a capitalist until it’s time to do what capitalists do. When that time comes the rich turn to socialists as fast as dollars can be printed. Who are the republicans and democrats and capitalists kidding? Only themselves. Karl Marx is laughing in his grave.

Sechel
Sechel

If Trump is restarting the economy in less than two weeks it begs the question on why this is all necessary. I don't really believe that Trump's dreamed up goal is achievable when the new infectins and deaths are increasing and not decreasing but he is the commander in chief.

DBG8489
DBG8489

Here's an idea for Trump:

Prove to everyone on the planet that you have 50 lb cast-iron balls swinging below a johnson to rival Moe Biggsley.

Take 12 hours and have your staff read the whole thing and create an itemized list that shows each garbage provision along with a sentence explaining why it's garbage.

Hold a very large very public press conference where you go over each item, and then veto the the bill on camera and send it back.

Make them override it or change it.

PecuniaNonOlet
PecuniaNonOlet

Saw Kudlow at Trumps briefing. Its is a SIX trillion dollar bailout. Four trillion for banksters and two trillion for people who got laid off.
And the economy is supposed to be roaring back after Easter.

You’ve done been had.

QE2Infinity
QE2Infinity

We're early in this crisis (both health and financial) and it's hard to see how throwing buckets of counterfeit money at this problem is going to make anything better. But today Wall Street gamblers were sent stampeding like lemmings.

Russell J
Russell J

I'm gonna go out on a limb and say the national debt will be 35t in 36 months. How it plays out from there is beyond me but they're right when they say life is not going to be the same from here on.

Herkie
Herkie

One moment Mish, if the market cap is around 50-60 trillion for all equities and it soared by 11% in one day that means something like $6 TRILLION was plowed into stocks just today.

Now who do you know that has that kind of cash just sitting around waiting to buy stocks?

Todasy was all about Fed intervention and the blinding flash of every bit of Fed power to nuke the market with money. Of course the middle and lower classes WILL pay for all of this eventually via unmeasured and unreported hyperinflation. But, at least they will not run out of toilet paper for about 5 years.

Herkie
Herkie

Total public debt outstanding on January 20, 2017 = $19,947,304,555,212.49
Total public debt outstandiung today = $23,514,534,990,918.53

By tthe time Trump's first term is up that will be AT LEAST $27 trillion, in 48 months we will have added 7 trillion. More than $14.583 billion per month every month of his tenure.

So, the far right that so desparately wants fiscal rectitude now has to admit Obama was a far better president in that regard. In fact nobody could possible be worse than Trump.

TumblingDice
TumblingDice

@PecuniaNonOlet, If what you are saying about $6 Trillion being pumped into the market. That is a lot of cash added to the sidelines.

Seems like people have two options:

  1. Save money at the bank and let the Fed drip, drip, drip, and drip rob you.
    or
  2. Belly up to the stock market (craps table) and take one's chances there.
AshH
AshH

What's the saying? Something like "don't let a good crisis go to waste"?


Global Economics

FEATURED
COMMUNITY