The Senate had a slumber party in Washington last night. With the house of representatives working from home, their friends from across the capital worked through the night to finalize details in what is set to be the 3rd coronavirus bill coming out of congress this month. Members of the senate are set to vote on this $2-trillion bipartisan package which would conclude a 5-day marathon to bring this needed stimulus and relief to key businesses and citizens.
The details of the package are set to be released later today, but officials from both sides of the aisle and both the legislative and executive branches have been dripping details to the media to ensure everyone that “Help is on the way, big help and quick help” -Senate Minority leader Chuck Schumer.
Senate Majority leader Mitch McConnell noted that this package would focus aid on unemployment insurance for workers impacted by the health crisis as well as emergency loans for small businesses. White House economic adviser Larry Kudlow said the $2-trillion stimulus package would work in tandem with the $4-trillion in bolstered lending power from the FED.
Throughout this week, markets have responded positively when progress is being made towards passing this fiscal stimulus package and negatively when roadblocks appear. Congress had a few days of debate about the most effective ways to boost the economy, who to funnel aid to and how to ensure that the recipients were good stewards of any such aid. Yesterday, the DOW Jones Industrial Average surged more than 11% on expectations that congress would be signing this fiscal stimulus package.
Some analysts and investors are warning that this sharp uptick in stocks does not historically point to the end of a bear market, but measures of market volatility (i.e. VIX) (which spike during times of crisis and uncertainty) are indicating that markets might be starting to settle in. Markets will be keyed in on the further spread of this disease and the developments of economic slowdown that happens as a result. Investors are closely watching the job market through and after this crisis, because it is a main driver of consumer spending and thus the overall economy.
Both fiscal and monetary policymakers are showing a willingness to pull out all of the stops in an attempt to buffer the economy from this crisis – investors love to see it.