The bottom may be in.
Markets are pushing higher after the White House and Senate stuck a deal on a $2 trillion stimulus bill to help keep the economy afloat. Majority Leader Mitch McConnell said the Senate will vote and pass the legislation later today. And Senate Minority Leader Chuck Schumer called it “the largest rescue package in American history,” as quoted by CNBC.
The deal includes direct deposits for many Americans, $367 billion for loans to small businesses and a program that will provide $500 billion to the Treasury Department, as noted by MarketWatch. For some, payments would phase out for those with an adjusted gross income of more than $75,000. Those making more than $99,000 will not qualify.
Senate Majority Leader Mitch McConnell said the Senate would pass it later today. And Speak of the House Nancy Pelosi said the House could pass it quickly, as well.
There’s hope this will be enough to light a fire under the economy.
Right now, according to Tom Porcelli, chief U.S. economist at RBC Capital Markets, as also highlighted by MarketWatch, the U.S. economy is running at a $21.5 trillion, or $413 billion per week, rate before the virus hit. “Assuming the economy is 30% shut down, the $2 trillion probably gets you through 16 weeks.”
In addition, former Federal Reserve Chairman Ben Bernanke said the U.S. economy will experience a quick rebound after a “very sharp” recession, as noted by CNBC. “If there’s not too much damage done to the workforce, to the businesses during the shutdown period, however long that may be, then we could see a fairly quick rebound,” he said.
St. Louis Fed President added the economy will take a bit short-term hit but will snap back strongly. “Once the virus goes away and if we play our cards right and keep everything intact, then everyone will go back to work and everything will be fine,” he said.
Unfortunately, we could get derailed again with the virus.
At the same time, we have to remember that fear could also drive us lower again.
While there’s hope stimulus will be enough, we also need improvements in the number of coronavirus cases. At the moment, it’s still driving a good deal of fear for many investors. Last checked, there are now 436,159 cases, with 19,648 deaths.