Premarket: Apple is green, but slipping

From “Dow Futures Extends Gains, Global Stocks Rally, After Senate Agrees $2 Trillion Coronavirus Relief Bill” posted early Wednesday on TheStreet:

green apple coronavirus 3-25U.S. stocks look set to rally for a second consecutive session Wednesday, following the biggest gain for Dow in nearly ninety years, after Senate lawmakers agreed a $2 trillion coronavirus relief bill that will help prop-up the hobbled domestic economy.

Senate Majority Leader Mitch McConnell said the unprecedented amount of cash — a sum many times larger than the U.S. Defense budget — would be a “wartime level of investment into our nation” after reaching an agreement with rival Democrats in the early hours of Wednesday monrnig.

 If approved by both Houses of Congress later today, and then signed by President Donald Trump, the bill will provide around $500 billion in direct corporate loans and a further $500 billion in immediate cash to millions of American households.

Alongside the Federal Reserve’s extraordinary moves earlier this week, including its pledge to buy corporate bonds, roll out loan programs to small and medium-sized businesses and purchase unlimited amounts of government debt and mortgage-backed securities, the U.S. is ready to throw $6 trillion in front of the oncoming wave of coronavrius-lead damage to the domestic economy — or nearly a third of overall GDP.

 “Help is on the way, big help and quick help,” said Democratic Senator Chuck Schumer.

My take: Glad the deal got cut overnight, but the market’s reaction makes me nervous. This will not be over by Easter.

7 Comments

  1. Gregg Thurman said:

    Normally it takes 6 to 9 months for government stimulus to be felt in the economy. But that’s during regular times with stimulus far less aggressive than that being thrown at the economy today.

    The combination of Fed and Congressional actions is clearly meant to keep employment up, even if there isn’t actual work being performed.

    I don’t see how the Fed and Treasury can recoup these expenditures in the next 10 years, which means a massive concomitant increase in interest expense. Say goodbye to last year’s tax cuts.

    Trump is well justified in worrying that the cure will hurt more than the disease.

    1
    March 25, 2020
  2. Gregg Thurman said:

    A review of Asian an European exchanges shows very modest gains today, but that should be expected after yesterday’s tremendous gains. The important takeaway is that yesterday’s gains are holding, until the seesaw action of the last three weeks.

    If the gains hold through this coming Monday I’ll be reentering the market, and not at all disappointed I missed the bottom (by a lot). My hat goes off to those with the balls to buy in last week.

    As for AAPL, it might take another year (from January 2021) to hit $400, but so what, it will in time and that’s the important point.

    1
    March 25, 2020
    • Gregg Thurman said:

      This is only Tuesday, but end of session trading today casts doubt in my mind that AAPL can hold at least $245 through Friday. It would appear then that it will be another week before I consider reentering the market.

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      March 25, 2020
  3. Jerry Doyle said:

    The futures are up as I write this comment. My impression is everything going forward is dependent on the virus relative to new cases, deaths and government response. If all seemingly is under control, then we bottomed last week. If all seemingly is not under control, then we test new lows going forward.

    The president can declare publicly a return to business as normal, but if new Covid-19 cases continue to evolve rapidly, more people are dying, it matters little if restaurants, hotels, sports events, casinos and service industries reopen. The public won’t venture into these establishments. Travelers want get on airplanes. People want stay in hotels. Fans want attend sports events. Businesses may be opened, but few if any consumers show. The president will be positioned as a man shouting into a howling windstorm. No one will hear him. He has made a strategic national decision to ramp the nation back up April 12. It is a presidential decision worthy of historical note. If he is correct, little to nothing can stop him going forward. If he is wrong, he may suffer irreparable political damage.

    1
    March 25, 2020
  4. Steven Philips said:

    I read an editorial yesterday about all the things politicians were trying to add to this bill that were extraneous to the financial or medical issues. I don’t know how many made it through. But I think there will probably be many “unintended” – but not unforeseeable – consequences in the next few years.
    We are “living in interesting times.”

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    March 25, 2020
    • David Emery said:

      I saw a report on the House bill that was loaded with irrelevant provisions that various members wanted for their own agendas. But it’s the Senate bill that passed. We’ll have to see if that gets changed much in Conference before final approval.

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      March 25, 2020
  5. David Emery said:

    Dow (5.13%) is up much more than NASDAQ (1.99% 3:00 PM), which I find interesting. I may be wrong, but it’s my sense that NASDAQ is weighted towards companies who produce ‘products’, which should do well on the bounce. Service companies are the ones that I think will have continuing problems once we’re over the immediate shutdown/shelter-in-place.

    0
    March 25, 2020

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