For your viewing pleasure this weekend I submit the latest edition of Consuelo Mack's PBS "Wealthtrack" program, in which investment guru Ed Hyman presents his perspective (and a rather decent summary of the crisis) on how, despite the terrible data and highly uncertain future, we are still going from "really bad" to "better." He lays out the whole case, well worth the 22 minutes. Keep enjoying the beautiful weekend and stay safe.
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MAY 14, 2020
Dear WEALTHTRACK Subscriber,
No doubt about it. The stream of economic news is terrible. The pandemic induced shutdown of much of the U.S. economy, Europe and other countries has resulted in stunning declines in employment, income, sales, earnings, government revenues and overall economic output.
Federal Reserve Chair, Jerome Powell addressed the scope of the damage in a sobering speech on Wednesday:
“The scope and speed of this downturn are without modern precedent, significantly worse than any recession since World War II. We are seeing a severe decline in economic activity and in employment, and already the job gains of the past decade have been erased. Since the pandemic arrived in force just two months ago, more than 20 million people have lost their jobs. A Fed survey being released tomorrow reflects findings similar to many others: Among people who were working in February, almost 40 percent of those in households making less than $40,000 a year had lost a job in March. This reversal of economic fortune has caused a level of pain that is hard to capture in words, as lives are upended amid great uncertainty about the future.”
As Powell points out the downturn has also triggered record breaking amounts of stimulus from central banks and governments:
“Governments around the world have responded quickly with measures to support workers who have lost income and businesses that have either closed or seen a sharp drop in activity. The response here in the United States has been particularly swift and forceful.
To date, Congress has provided roughly $2.9 trillion in fiscal support for households, businesses, health-care providers, and state and local governments—about 14 percent of gross domestic product. While the coronavirus economic shock appears to be the largest on record, the fiscal response has also been the fastest and largest response for any postwar downturn.
At the Fed, we have also acted with unprecedented speed and force. After rapidly cutting the federal funds rate to close to zero, we took a wide array of additional measures to facilitate the flow of credit in the economy, which can be grouped into four areas. First, outright purchases of Treasuries and agency mortgage-backed securities to restore functionality in these critical markets. Second, liquidity and funding measures, including discount window measures, expanded swap lines with foreign central banks, and several facilities with Treasury backing to support smooth functioning in money markets. Third, with additional backing from the Treasury, facilities to more directly support the flow of credit to households, businesses, and state and local governments. And fourth, temporary regulatory adjustments to encourage and allow banks to expand their balance sheets to support their household and business customers.”
He also noted that the future is highly uncertain:
“While the economic response has been both timely and appropriately large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks…” and that “… policies will need to be ready to address a range of possible outcomes.”
This week’s guest has been following and cataloguing all of the economic and policy developments since the beginning of the pandemic and joins us with a summary and update on what it means for the overall economy, businesses, consumers and investors.
We are delighted to welcome Ed Hyman back to WEALTHTRACK to share his current outlook with us. Hyman has been voted Wall Street’s Number One Economist for an unprecedented 39 years in Institutional Investor’s annual survey. No one else comes even close to that record.
He is Vice Chairman of Evercore, a leading independent investment banking and advisory firm, and the Founder and Chairman of its Evercore ISI division where he leads its economic research team.
For months now Hyman’s must read daily reports have described the condition of the global economy as being in “free fall” and the policy response as “massive”. Just recently however he noticed a slight change. As he described it the economic data was still “really bad,” but it was also, “better.”
He will describe both the “really bad” and the “better” for us.
Then, in this week’s EXTRA feature on our website, he will tell us what permanent changes he expects to be making in his life as a result of COVID-19.
If you are unable to join us for the show on television, you can watch it on our website over the weekend. You can also find the WEALTHTRACK podcast on Stitcher and SoundCloud as well as iTunes and Spotify.
As always, thank you for spending time with us. Have a peaceful weekend, and make the week ahead a healthy, profitable and productive one.
Best regards,
Consuelo |
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