The President’s March 31 daily update on the Covid-19 virus included a sobering comment that we should be prepared for two difficult weeks.  Yes, that seems to be bad and even unnerving news, but the silver lining could be that the virus impact may be in the process of peaking out, at least in the New York City area. Getting past the high point of the curve and reaching the downside will be very encouraging to all. To be sure, New York is not the entire country, but it is the epicenter for the virus here in the US.

The other potentially good news at the end of the two-week period is on the economic front. That is when the individual checks from the Government are expected to begin showing up in people’s accounts. Today, Treasury Secretary Mnuchin said that small businesses (under 500 employees) should be contacting their bank or financial institution and apply for the forgivable loans because that money is ready to go this week.

In our previous e-mail communiques, we have focused on the immediate need and a constructive outlook for the future. This one will be different. We will lay out the four essential elements for recovery and our view as to where we are as far as the progress toward accomplishing each of them.

1)     Monetary Policy – This is the realm of the Federal Reserve (Fed). We can check this box because the Fed has committed to unlimited QE (money creation) to deal with the crisis. This means that the federal government will have the backing to spend whatever is necessary to deal with the medical needs and the economic needs of the US.

2)     Fiscal Policy – This is the realm of the Administration and the Congress. In a previous e-mail, we had sharp criticism for the delays caused by policy wrangling by some politicians because we felt that the American people were being hurt by these actions. Now we laud them for answering the call and passing the needed stimulus legislation. This approximately $2 trillion package may be enough with the Fed backing but, if not, it will be a significant first step with more to follow in the “whatever it takes” mentality.

This morning (March 23) the Fed announced that they will provide “unlimited QE.”  This means that whatever the government wants to spend to combat the effects of Covid-19 will be backstopped by the Fed. In the 2008-2009 crisis, the world was shocked when they added $3.5 trillion to the balance sheet through QE. Now that seems like “small potatoes” in relation to what they are presently doing.