Dow erases all gains since Trump’s election

The Dow has erased all gains since President Donald Trump’s election in 2016 as it plunged 900 points on Monday amid the coronavirus pandemic. 

US stocks slipped on Monday even after the Federal Reserve announced an aggressive credit boost amid the coronavirus pandemic and investors waited for Congress to agree on a rescue plan. 

The Dow Jones Industrial Average traded 952 points lower (5 percent) at opening on Monday, while the S&P 500 slid 4.9 percent and the Nasdaq dropped 3.6 percent.  

Shortly before noon in New York, the Dow dropped lower than where the index closed on the day Trump was elected on November 8, 2016.

The market had been set to open even lower until the Federal Reserve early Monday announced its most aggressive action yet to protect the economy from the extensive damage being caused by the coronavirus. 

The scale of the Fed’s moves impressed investors, but stocks still fell in the first few minutes of trading as worries continue to rise about the economic pain being caused by the coronavirus outbreak.   

Fears about the extent of the coronavirus-related hit to Corporate America have erased more than $9 trillion from the S&P 500 since its record high last month. US stock indexes ended Friday with their worst week since the global financial crisis. 

The Dow has erased all gains since President Donald Trump’s election in 2016 as it plunged 900 points on Monday amid the coronavirus pandemic 

Central banks are doing what they can to support the economy as more states and communities close down but investors want to see the U.S. government do its part as well. 

Congress was debating a nearly $2 trillion rescue package for the economy over the weekend but top Trump administration officials and congressional leaders are struggling to finalize it. 

While US stock futures got a boost early in the morning following the Fed’s announcement, the gains quickly diminished.  

In a series of sweeping steps, the Fed said it would buy as much government debt as it deems necessary and would also begin lending to small and large businesses and local governments to help them weather the crisis.

The Fed said it will set up three new lending facilities that will provide up to $300 billion by purchasing corporate bonds, buying a wider range of municipal bonds, and purchasing asset-backed securities.

It also says it will buy an unlimited amount of Treasury bonds and mortgage-backed securities in an effort hold down interest rates and ensure those markets function smoothly.  

Lockdowns and closures intended to halt the spread of the new coronavirus expanded over the weekend. 

Ultimately, investors say they need to see the number of new infections stop accelerating for the market to end its prolonged, bouncing tumble.  

Traders, some in medical masks, work on the floor of the New York Stock Exchange last week

Traders, some in medical masks, work on the floor of the New York Stock Exchange last week

Investors have continued to seek safety in U.S. government bonds, driving their yields broadly lower. The 10-year Treasury yield, which influences interest rates on mortgages and other consumer loans, slid to 0.80 percent Monday from 0.94 percent late Friday.

At nearly $2 trillion, the US rescue package is the biggest effort yet to aid households and shore up the US economy. 

Yet top White House officials and congressional leaders struggled on Monday to finalize rescue package as the coronavirus crisis deepened.  

Democrats had derailed the plan on Sunday night, arguing it was tilted toward corporations and did too little to help workers and health care providers. 

Central to the package is as much as $350 billion for small businesses to keep making payroll while workers are forced to stay home.  

Nearly one in three Americans have now been ordered to stay home, foreshadowing a further dent to economic activity. 

Starting Monday, the New York Stock Exchange will fully shift to electronic trading. 

There is also a one-time rebate check of about $1,200 per person, or $3,000 for a family of four, as well as the extended unemployment benefits. 

Treasury Secretary Steven Mnuchin said hospital will get approximately $110 billion for the expected influx of sick patients. 

He said a significant part of the package will involve working with the Federal Reserve for up to $4 trillion of liquidity to support the economy with ‘broad-based lending programs.’

But Democrats, including House Speaker Nancy Pelosi, have pushed for add-ons, including food security aid, small business loans and other measures for workers.

They warned the draft plan’s $500 billion for corporations does not put enough restraints on business, saying the ban on corporate stock buy-backs is weak and the limits on executive pay are only for two years.

Democrats, including House Speaker Nancy Pelosi, have pushed for add-ons, including food security aid, small business loans and other measures for workers

Democrats, including House Speaker Nancy Pelosi, have pushed for add-ons, including food security aid, small business loans and other measures for workers

Louisiana and Ohio have joined nine other states in issuing statewide stay at home orders aimed at stemming the spread of the deadly coronavirus

The unemployment rate may hit 30% because of coronavirus with an unprecedented 50% drop in gross domestic product, Federal Reserve bank boss warns

The unemployment may hit 30 percent because of coroanvirus with an unprecedented 50 percent drop in gross domestic product, a Federal Reserve chief has warned.

James Bullard, president of the St Louis Fed, said that ‘everything is on the table’ for lending to replace up to $2.5 trillion lost as a result of job losses in the first quarter.

‘There is more that we can do if necessary,’ Bullard told Bloomberg.

‘There is probably much more in the months ahead depending on where Congress wants to go.’

The Fed last week began drastic measures to breathe life into the economy, cutting interest rates to almost zero and promising to increase its holdings of Treasuries by $500billion and of mortgage securities by $200billion. 

‘This is a planned, organized partial shutdown of the U.S. economy in the second quarter… The overall goal is to keep everyone, households and businesses, whole,’ Bullard said. 

The urgency to act is mounting as jobless claims continue to skyrocket and the financial markets opened on Monday eager for signs that Washington can soften the blow of the healthcare crisis and what experts say is a looming recession. 

Stock futures declined sharply as Trump spoke from the White House on Sunday evening as he promised to help Americans who feel afraid and isolated as the pandemic continues to spread. 

The US commercial mortgage market is on the brink of COLLAPSE because of the coronavirus crisis says real estate billionaire Tom Barrack 

Tom Barrack, who is the CEO and chairman of Colony Capital Inc., has warned that the US commercial mortgage market is on the brink of collapse due to the coronavirus

Tom Barrack, who is the CEO and chairman of Colony Capital Inc., has warned that the US commercial mortgage market is on the brink of collapse due to the coronavirus

Real estate billionaire Tom Barrack has warned that the US commercial mortgage market is on the brink of collapse due to the coronavirus and says the effect of the pandemic could dwarf the impacts of the Great Depression.   

Barrack, who is the CEO and chairman of Colony Capital Inc., predicted there would be a ‘domino effect’ that would greatly impact the US economy and Americans if banks and the government don’t work together to mitigate the crisis. 

In a Medium post on Sunday, he said the impact on the US economy due to the coronavirus pandemic and the subsequent public health measures taken in response to it has caused high-performing mortgage loans to decrease in value.

Barrack, who is a longtime friend of President Donald Trump, warned that if banks and non-bank lenders were not given the flexibility to undertake loan restructuring efforts, loan repayment demands would likely escalate systematically.

He said it could potentially trigger a ‘domino effect’ of borrower defaults that would impact the entire real estate market, including property owners and landlords.

‘At a moment when liquidity is essential to avert public panic and to facilitate investments that respond to rapidly-changing and unprecedented economic conditions, the real estate financing market is in danger of inciting a liquidity freeze,’ he wrote.

‘A market collapse of this magnitude would have catastrophic follow-on effects across the American economy.’

Barrack warned that the threat posed by the coronavirus was unlike anything the United States had seen before and said Americans will be financially challenged unlike anything experienced since the Great Depression.  

‘Absent immediate intervention, the effect of the COVID-19 pandemic on the entire real estate market, particularly property values, could dwarf the impacts of the Great Depression,’ he said. 

Barrack, whose company has a number of investments in real estate, suggested a number of partial solutions for banks and governments in response to the current crisis. 

He urged Congress to provide $500 billion to give liquidity to the financial system to allow for loans and repurchasing.     

Fallout of 2008 bailout looms over Washington negotiations 

By Associated Press 

In the fall of 2008, an unlikely alliance of lawmakers, regulators and Bush administration officials banded together to rescue an economy they feared was hours away from collapse. They also unwittingly reshaped American politics, unleashing a populist furor that lingers in both parties to this day.

More than a decade later, those same political forces are shadowing a new debate over emergency government spending – only with far more taxpayer money at stake and even greater uncertainty over Americans´ futures.

On the table: a nearly $2 trillion rescue package for major industries, small businesses and individuals impacted by the fast-moving coronavirus.

Though more emergency money could be needed, this package is already larger than the $700 billion bank bailout President George W. Bush requested in 2008 and the almost $800 billion his successor, President Barack Obama, sought in stimulus in 2009. That response stabilized the economy, but upended politics and helped fuel President Donald Trump’s path to power.

The circumstances that led to each extraordinary moment are different, one a financial crisis prompted by risky Wall Street investments, the other a pandemic that has crippled airlines, restaurants and scores of other businesses. But they both put the onus on Washington to act quickly to address complex matters, leaving leaders with decisions that could define their careers.

‘Heads snap up pretty quickly when they remember how deeply angry the American people were about a no-strings bailout that rewarded executives and shareholders while families continued to suffer,’ Massachusetts Sen. Elizabeth Warren, one of the most prominent political figures to emerge from the progressive awakening that followed the Wall Street bailout, said in an interview. 

Warren is among the Democrats pushing for restrictions on big businesses that receive a government bailout and for pledges to keep workers on payroll. She joined other Senate Democrats on Sunday night in blocking the $2 trillion measure, arguing that there would be little oversight of the companies propped up with taxpayer money.

There’s also worry about the scope – and political cost – of the pending bailouts among some on the right as the Trump administration and lawmakers continue negotiations.

Trump said Sunday he wanted to ensure that any company that received public money couldn’t use it to buy back their stock and raise its value. The Senate bill, written by Republicans, includes a ban on stock buybacks that has been criticized as weak.

‘I may be Republican but I don´t like that,’ Trump said. But he angered many Democrats by refusing to rule out the possibility that his family’s company, which runs hotels and resorts, might receive government funds.

Nikki Haley, the former Trump Cabinet official and a likely GOP presidential hopeful in 2024, announced last week that she was stepping down from the board of Boeing because she was uncomfortable with the company´s decision to seek government help.

‘I cannot support a move to lean on the federal government for a stimulus or a bailout that prioritizes our company over others and relies on taxpayers to guarantee our financial position,’ Haley wrote in announcing her decision. ‘I have long held strong convictions that this is not the role of government.’

Warren, Trump and Haley represent the poles of the populist waves that swept through both parties after the Great Recession.

On the left, Warren and Sen. Bernie Sanders argued against a system ‘rigged’ in favor of the wealthy, called for breaking up large companies, and championed proposals to replace private businesses, such as the health insurance industry, with government-run programs. Though their positions are still deemed outside the mainstream by many Democrats – and Sanders could soon follow Warren in ending his presidential campaign – they have succeeded in pushing their party further to the left over the past decade.

Indeed, Sanders was still railing against the 2008 Wall Street bailout last week in his presidential debate with Joe Biden, the likely Democratic nominee who voted for the package while he was in the Senate and helped administer it as Obama´s vice president.

‘We need to stabilize the economy, but we can´t repeat what we did in 2008,’ said Sanders, who voted against the bailout package.

On the right, the tea party movement tapped into a viscerally anti-government sentiment among some voters after the bailout, helping propel a new crop of political candidates and taking down numerous Republican stalwarts who were deemed too cozy with the same Wall Street banks that benefited from the bailout.

‘Back in `08 there was an industry to blame,’ said Eric Cantor, the former Republican House Majority Leader who lost his 2014 primary to Dave Brat, a little-known economics professor backed by the tea party. ‘And that´s exactly where the government aid and assistance went – to the industry that was the facilitator of the problem.’

That´s where the coronavirus crisis most starkly differs from the financial collapse. There´s no corporate interest to blame and economic activity has slowed dramatically or halted for virtually every sector.

‘We had the financial crisis because people did bad things,’ said Barney Frank, a former Massachusetts Democratic congressman who helped author a 2010 bill that was the most sweeping overhaul of financial regulation since the Great Depression. ‘Nobody´s done bad things to get the coronavirus.’

Still, less than eight months before the next presidential election, politicians in both parties are mindful of the potential fallout from plunging nearly $2 trillion into the economy, with much of the money heading toward large companies.

The Senate Republican framework backed by Trump calls for $350 billion to help small businesses make payroll, as well as $1,200 checks for millions of Americans. Trump has also proposed having the government take equity positions in companies that receive bailouts – something that has happened in the past but is still a departure from the GOP’s traditional aversion to government intervention in private business.

So far he has stopped short of fully exploiting the Defense Protection Act which gives him the power to compel private businesses to meet government needs.

Yet some Trump allies are still raising concerns.

Stephen Moore, founder of the conservative Club for Growth and an economic adviser to the president, said the White House and Congress need to be careful to avoid the impression that the government is picking winners and losers as it authorizes money to struggling industries.

‘Where do you stop with this?’ he said. ‘If you´re going to pick the airlines, what about the oil companies, are you going to pick them? What about the movie theaters? What about the corner shop that´s closed down?’

Warren said lawmakers would be wise to proceed with caution before allocating massive sums of taxpayer money to private businesses, arguing that many Americans are still stung by Washington´s actions more than a decade ago.

‘The anger is real still,’ she said, recounting conversations she had with voters during her recent presidential campaign. ‘I would have people come through the selfie line and say, `I was in high school when my family lost their home during the 2008 crash and there was nobody there to help us.´’

‘People still live it in a very real way,’ she said.