Friday, March 20, 2020

Federal Reserve Actions To Address Financial And Economic Weakness

Recently, the Federal Reserve has taken many substantial actions to address financial market weakness, as well as an actual and expected very large drop in economic activity.
In addition to the actions taken by the Federal Reserve, there are various actions taken at the Federal, State, and local levels. These programs are largely still being formulated.
Some of the stimulus programs being formulated at the Federal level are very large, likely in the trillions of dollars.
The following is a list of action, programs, and interventions recently taken by the Federal Reserve. Of note, many of these programs were enacted or otherwise used during the Financial Crisis. The below list does not necessarily include all of the actions taken to date:
-The Federal Reserve, in two steps (March 3 & March 15), decided to lower the target range for the federal funds rate to 0 to 1/4 percent; this second rate cut is discussed in the FOMC Press Conference discussed in the “March 15, 2020 FOMC Press Conference” post. As well, as discussed in that FOMC Press Conference, additional asset purchases, i.e. Quantitative Easing (QE).
Many other programs and interventions, as detailed on the Federal Reserve’s “Coronavirus Disease 2019 (COVID-19)” page. Among these programs are:
As well, there has been a very substantial, continuing increase in the Federal Reserve Repurchase Agreements (e.g. “repos”.) A list of the scheduled New York Federal Reserve’s Repo operations, as of the latest (March 16, 2020) update:
New York Federal Reserve Schedule of Overnight and Term Repurchase Agreement Operations
I have written extensively about interventions of all types, including Quantitative Easing (QE) and past stimulus programs. Posts discussing intervention measures can generally be found in the “Interventions” label.
As I have previously written, my analyses indicate that, in general, while interventions are intended to provide beneficial effects to the markets and economy, they also present an array of risks, detrimental impacts, and unintended consequences. They have many complex impacts on the economy and financial markets. 
The Special Note summarizes my overall thoughts about our economic situation
SPX at 2427.88 as this post is written

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