The Fed says it’ll buy as much debt as it needs to cushion the blow of the virus.
The Federal Reserve said it would buy as much government-backed debt as needed to soothe fraught markets and unrolled a series of programs meant to shore up both large and small businesses, unveiling a whatever-it-takes effort to cushion the economic blow of coronavirus.
“Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate,” the central bank said in a Monday morning statement, adding that “the Federal Reserve is using its full range of authorities to provide powerful support for the flow of credit to American families and businesses.”
The central bank, which restarted its massive bond-buying program eight days ago, said it would expand it well beyond the $700 billion in Treasury and $200 billion in mortgage-backed securities that it had initially placed on those purchases. Instead, officials will buy bonds “in the amounts needed to support smooth market functioning.”
Global markets tumble after the U.S. fails to reach a deal.
Financial markets look set for another troubled day, as U.S. stock futures fell on Monday and benchmark indexes in Europe and Asia tumbled.
Investors were reacting in part to a political stalemate in the United States. Senate Democrats on Sunday blocked action on an emerging deal to prop up the American economy, halting the progress of a nearly $2 trillion government rescue package. They contended that the legislation failed to adequately protect workers or impose strict enough restrictions on bailed-out businesses.
Investors signaled their nervousness by putting money in places generally considered safe. The price of the 10-year Treasury bond rose, sending yields lower. Gold futures also rose. Oil prices were slightly down, suggesting investors see little demand for fuel.
Major indexes in Germany, Britain and France were 2 to 3 percent lower in morning trading, most Asian markets closed down, and futures markets signaled that Wall Street would fall when trading begins.
In the Asia-Pacific region, Australian stocks led the tumble with a 5.6 percent drop. In South Korea, the Kospi index fell 5.3 percent. Hong Kong shares were down 4.9 percent late in the trading day. In mainland China, the Shanghai Composite Index fell 3.1 percent.
SoftBank to sell assets, buy up its own falling shares.
SoftBank on Monday announced that it will sell down $41 billion in assets as it seeks to buy up its own shares, which have dropped precipitously in the last month amid investor concerns about the coronavirus’s impact on its holdings in top tech companies like Uber.
SoftBank, which controls a $100 billion tech investment fund, has bet heavily on tech companies — many offering services such as ride-sharing and hotel booking — that have seen their share prices plummet as consumers stay home amid the pandemic.
In a statement on Monday, SoftBank said it would use 2 trillion yen from the sale of its assets to purchase its own shares. The amount is on top of a 500 billion yen buyback announced earlier this month.
Since mid-February, the company’s share price have dropped by more than 50 percent.
Stuck in a spare room, running a company.
On Thursday morning, Chuck Robbins, the chief executive of Cisco, signed on to a companywide video conference from his home office in Silicon Valley. The connection was stable, but the quality was not great.
“I tell you,” he said in an earlier interview, “this whole teleworking thing — as much as we sell it to our customers, I’m not sure I want to do it 100 percent of the time.”
As the coronavirus sweeps the globe, even chief executives — who normally flit from meetings to conferences in chauffeured SUVs and private jets — have been confined to spare rooms.
From there, they are working to keep their business afloat as the stock market plummets; managing supply chains upended by travel restrictions and labor shortages; and trying to keep their employees healthy and sane.
The U.S. needs China’s masks, as acrimony grows.
American front-line medical personnel are running desperately short of masks and protective equipment as they battle the coronavirus outbreak. China, already the world’s largest producer of such gear by far, has ramped up factory output and is now signaling that it wants to help.
Reaching deals won’t be easy. Increasingly acrimonious relations between Washington and Beijing are complicating efforts to get Chinese-made masks to American clinics and hospitals. A breakdown over the last few days in the global business of moving goods by air around the world will make it costly and difficult as well.
At heart, the two countries, which only recently reached a truce in President Trump’s trade war, have some similar problems. Both face harsh questions over their missteps in responding to the outbreak. Washington and Beijing make handy foils for each other — and essential protective gear could get caught in the middle unless they reach an understanding.
A U.S. recession looms as the economic outlook darkens daily.
The American economy is facing a plunge into uncharted waters.
Economists say there is little doubt that the nation is headed into a recession. But it is harder to foresee the bottom, or predict how long it will take to climb back. The abruptness of the descent — and the near-lockdown of major cities — is unheard-of in advanced economies, more akin to wartime privation than to the downturn that accompanied the financial crisis more than a decade ago, or even the Great Depression.
Smaller companies will be hit harder than large ones because they have limited access to credit and less cash in the bank; a wide swath will be unable to survive. And unemployment could hit 10 percent in April, a level unseen since the nadir of the last recession, with the possibility of even higher jobless rates in the following months
A strong rebound — what economists call a V-shaped recovery, as opposed to a U-shaped one, with an extended low — would require a profound resurgence in confidence. But few see that on the horizon.
Catch up: Here’s what else is happening.
Singapore Airlines joined other carriers in grounding virtually all of its fleet. It said on Monday it would ground 96 percent of its capacity until the end of April.
Drive-through testing sites were opened Sunday in Walmart parking lots in the Chicago area, part of the retailer’s collaboration with federal health officials, for health care workers and emergency personnel.
In a letter to congressional leadership on Saturday, the chief executives of the major airlines, UPS and FedEx said that they would postpone mass layoffs and stock buybacks and dividends if a bailout large enough is passed.
Reporting was contributed by David Gelles, Keith Bradsher, Ana Swanson, Carlos Tejada, Ben Dooley, Vindu Goel, Kevin Granville and Daniel Victor.