Did the 2,000-plus-point drop in the Dow Jones Industrial Average DJIA, -7.78% on Monday cause the White House to blink?
After all, White House officials have previously said they wanted a limited response, with National Economic Council Director Larry Kudlow at one point calling for a “micro approach.”
“The fiscal response has been [a] disappointment,” said Neil Dutta, head of economics at Renaissance Macro Research. “For a president that laments about the rates the U.S. pays, it is surprising to see how little the administration is willing to do with them now they’ve arrived,” he said in a note to clients.
Perhaps that’s changing. At a news conference after stock markets had shut on Monday, President Trump said discussions will take place with Senate Republicans on a possible payroll tax cut, relief to hourly workers, loans to small businesses and help for the travel industry.
A report from CNBC tempered enthusiasm, however, as it quoted unnamed officials saying a plan “is not there right now.”
Dutta said there’s good news that could limit the fallout if there is a recession, which he still doesn’t think will happen. The U.S. economy picked up steam over the winter, and the drop in mortgage interest rates is providing for a refinancing boom at an opportune time. Lower gasoline prices also will provide a tailwind to consumers, and China is now beginning to resume activity, Dutta said.
The buzz
Besides the U.S., Japan is set to unveil new fiscal measures as Europe considers its next steps. The U.K. will release its budget on Wednesday. An Italian minister said mortgage payments from individuals will be suspended across the whole of Italy.
On the coronavirus front, there are 114,567 confirmed cases globally which have led to 4,027 deaths, according to the Johns Hopkins tracker of government reports. Italy is now number-two behind China with 9,172 cases and 463 fatalities. South Korea reported fewer than 150 new cases for the first time in two weeks.
Saudi Aramco said on Tuesday it will boost its supply of crude oil to 12.3 million barrels per day in April in the latest escalation of Saudi Arabia’s price war.
A number of U.S. airlines including Delta DAL, -5.16% and American Airlines AAL, -7.63% announced capacity reductions.
The House Financial Services committee is due to hold a hearing into Wells Fargo’s WFC, -12.42% practices, as two board members resigned this week. And the Consumer Financial Protection Bureau has filed a lawsuit against Fifth Third Bank FITB, -17.56%, alleging the bank’s employees opened fake accounts as Wells Fargo had done. The Cincinnati bank is fighting the lawsuit but acknowledged it opened 1,100 accounts fraudulently and has fully compensated for the damage.
The markets
Monday was so yesterday. U.S. stock futures ES00, +3.52% YM00, +3.48% surged on Tuesday, and crude-oil futures CL.1, +7.93% bounced up about 9%.
Bonds fell, with the yield on the 10-year Treasury TMUBMUSD10Y, 0.642% surging 16 basis points. Yields move in the opposite direction to prices. Gold futures GC00, -0.51% fell $9 an ounce.
The dollar surged against the Japanese yen USDJPY, +1.85% and also rose vs. the euro EURUSD, -0.43%.
The tweet
A fun table comparing the crisis of 2008 to now
Random reads
The popular Coachella festival may move to October.
Catalonia is funding companies that are floating the theory Shakespeare was Catalan.
This Indian polo star is renting out the family palace on Airbnb.
Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.
Add Comment