Congress Steps Up for the Economy

March 25, 2020

The Fed stepped up early and hard for the coronavirus crisis. It cut interest rates essentially to zero. It eased restrictions on banks to enable faster and more business lending. Plus, the Fed has taken unlimited measures to support the financial system as a whole, restarting programs from the last crisis to purchase bonds and inject money into the system. Unlike 2008, the Fed has been consistently ahead of the crisis, determined to choke any instability as quickly as possible before the medical crisis transmutes into a financial one. It largely looks like the Fed has been successful. The Fed and monetary policy have done what they can do so far, and they are poised to do more as needed.

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Coronavirus Update: U.S. Infection Growth Rate Holding Steady

March 24, 2020

Most of today’s headlines center around the rapidly growing number of coronavirus cases here in the U.S., with some comment on the fact that the number of cases in Italy also continues to grow rapidly. Occasionally, we also get a note that case growth in China has largely stopped.

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The Coronavirus Pandemic and the Financial Markets

March 20, 2020

We have spent the past couple of days first looking at the coronavirus pandemic itself and then at the likely economic effects. Which brings us to the third part of our discussion: market reactions. Now, we have the context to look at what has happened and think meaningfully about what might happen next.

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Assessing the Economic Damage from the Coronavirus Pandemic

March 19, 2020

Yesterday, we talked about how the coronavirus pandemic itself can be brought under control, and how in many countries it already has been. Here in the U.S., we are not there yet, but we can reasonably expect to get there in the next month or so. That is the good news.

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The Coronavirus Pandemic: A Solvable Problem?

March 18, 2020

Yesterday, we talked about the big picture around the coronavirus crisis: the pandemic itself, the likely economic effects, and, last but certainly not least, the market reactions. Next, I want to start a more detailed discussion of each component. We will deal with the pandemic today, the economy tomorrow, and the markets on Friday. Although the big picture provides valuable context, there is also quite a bit to be gained by diving deeper into each component.

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How to Think About the Coronavirus Pandemic: The Big Picture

March 17, 2020

With everything that is happening in the world, now is a good time to step back and think about where we are and where we might be going. There is a tremendous amount of information available. But what’s missing is a framework for that information that would help clarify the big picture.

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Where Bear? There Bear!

March 12, 2020

My son has a stuffed bear he got when he was quite small (from Commonwealth, as it happens). We used to play a game where the bear would sneak up on him. “Where bear? There bear!” Well, the bear is now here. We have finally seen the end of the bull market, with the Dow dropping 20 percent from its highs and the S&P 500 following today. We are officially in a bear market, with all that implies. Stock markets around the world are down again today on the news.

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