April 2020 – 3 in 3
The Federal Reserve has taken unprecedented actions to save the economy during the coronavirus crisis. Below is a timeline of the major actions taken in the past 6 weeks.
3/3: An emergency 0.5 percentage point interest rate cut.
3/15: Another 1 percentage point rate cut, taking the short-term lending down to near zero.
3/17: The Fed said it would start buying commercial paper that businesses rely on for operational cash.
3/20: Begin buying municipal debt headed by the Boston Fed
3/23: An expansion of the Fed’s originally announced asset purchases from 3/17, to unlimited buying depending on the need to support markets and the economy. They also added a $300 billion credit program for businesses and consumers.
4/6: The Fed will provide support to the Treasury’s Payment Protection Program aimed at incentivizing businesses not to lay off employees during the coronavirus-induced shutdown.
4/9: A $2.3 trillion lending program that will extend credit to banks that issue PPP loans, purchase up to $600 billion in loans issued through the Main Street program to medium-sized firms. The moves also involve secondary corporate credit facilities that will allow the Fed to buy corporate bonds from “fallen angels” that have slid into downgrades, and a $500 billion program to buy bonds from state and municipal governments.
In all, the programs could combine to provide more than $6 trillion of liquidity to the financial and business system.
On 3/26, the Government passed a $ 2 trillion Coronavirus response bill intended to speed relief across the American economy known as the CARES Act. There are seven main groups that would see the widest-reaching impacts: individuals, small businesses, big corporations, hospitals and public health, federal safety net, state and local governments, and education.
Individuals: Cash Payments, Extra unemployment benefits, Tax Return Deadline Extension, Tax Free Employer Student Loan Assistance, Insurance Coverage for all COVID-19 Treatments and Vaccines
Small Businesses: Emergency Grants to cover operating expenses, Forgivable SBA Loans, Relief for existing SBA loans
Big Corporations: Airlines, Stock Buyback Bans, Tax Credits for keeping workers on payroll.
Public Health & Hospitals: Additional funding for hospitals, community health centers, drug access, CDC, veterans’ health care, telehealth, medicine & supplies
Safety net: Child nutrition, food stamps, food banks
State & Local Governments: COVID response programs, educations, child care centers
Education: Temporary Student Loan Relief, Work Study Funds, Various other programs
CORONAVIRUS CASE UPDATE
New Coronavirus cases has been an important metric to track as it gives us an idea of how long the pandemic may last. Markets have reacted to news on case outbreaks daily. As of 4/15, the amount of new cases appears to be leveling off and declining. Social distancing, use of facemasks, and other government mandated programs appear to be working in containing the virus.
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April2020 – 3 in 3 Weaver Consulting Group is a local, family owned, Registered Investment Advisory practice in Huntington Beach, California. We have been providing our expertise and sharing our experiences for the last 22 years. It is our priority to act in the best interest of each person that we work with. Therefore, the experience you have with our firm is individually tailored. We strive to include all aspects of your personal and financial goals when consulting.