It’s early days, but the Federal Reserve “bazooka” has mostly impacted the 1%
Take a look at some contrasting sets of headlines. First, from planet earth:
Weekly Jobless Claims Hit 5.425 Million, Raising Monthly Loss To 22 Million Due To Coronavirus (CNBC)
Worst Case Fears Of 20%-Plus U.S. Jobless Rate Are Now Realistic (Bloomberg)
Then from Wall Street:
Private Equity-Owned Companies Sell New Bonds in Credit Rally (Bloomberg Law)
Fed’s Historic Move Spurs Rally in Junk Bonds: 6 ETF Picks (Nasdaq.com)
As we head into the second month of pandemic lockdown, two parallel narratives are developing about the financial rescue.
In one, ordinary people receive aid through programs that are piecemeal, complex, and riddled with conditions.
A law freezing evictions applies to holders of government-backed mortgages only. “Disaster grants” are coming more slowly and in smaller amounts than expected; small businesses were disappointed to learn from the SBA early last week that aid would be limited to $1000 per employee.
A one-time “economic impact payment,” reportedly delayed so recipients could experience the thrilling visual of Donald Trump’s name on the check, might help make half a rent payment. Unemployment insurance amounts have been raised, so tip and gig workers can now be ineligible for $600 a week more than before! The cost of a coronavirus test might be free, but you test positive, you could up paying $50,000 or more in hospital costs even with insurance. And so on.
Meanwhile, “relief” programs aimed at the top income levels were immediate, staggering in size and scope, and often appeared as grants rather than loans. One of the biggest layouts of the Covid-19 rescue was a political carrying charge that members of congress extracted just to get the larger bailout out the door – a pre-bailout bailout, if you will.
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