The magnitude of the economic shocks strongly implies that the probability of a general decline in prices — a dynamic known as deflation — is rising. This is happening despite $3.4 trillion in liquidity commitments and $2.89 trillion in fiscal support. … READ MORE >
Covid-19
Monetary policy in an era of pandemic economics
The Fed has put together nine different lending facilities and put forward liquidity commitments that run in the trillions. While we expect the Federal Open Market Committee to restate its commitment to keeping short-term rates as low as possible for as long as necessary, there will be more policy innovation coming in the near term. … READ MORE >
Testing, testing, testing: Preparing for the reopening of the economy
The idea of reopening the economy is somewhat of a misnomer. The economy will not return to normal all at once, and there is a clear risk of a second wave of the pandemic coming with the relaxation of shelter-in-place orders around the country. Since some governors are in the process of relaxing these restrictions, we thought this is the perfect opportunity to discuss the risks around those decisions. … READ MORE >
For private equity firms, valuations become a difficult question
How do private equity firms determine the fair value of their holdings when those values seem to change by the day, or even the hour, amid the economic havoc caused by the coronavirus? … READ MORE >
Claims for unemployment insurance continue to overwhelm state agencies
The number of initial claims for unemployment benefits declined in all but five states for the week ending April 18, according to filings processed at state agencies. But this is only the fifth week since the economies of most states were shut down to stop the spread of the coronavirus, and the levels remain extraordinarily high. … READ MORE >
Initial jobless claims deteriorate further as concerns over wage deflation mount
American labor dynamics deteriorated further for the week ending April 18 as 4.427 million workers filed initial jobless claims, implying that the near real-time unemployment rate has increased to 21.1% at a minimum. … READ MORE >
For real estate companies, the new Paycheck Protection Program funding is not a cure-all
The new Paycheck Protection Program will most likely face the same problem it had before: There isn’t enough money. At a burn rate that banking insiders estimate at $50 billion a day, the new Paycheck Protection Program funds are expected to be exhausted within a week. … READ MORE >
New relief is approved for hospitals, but challenges remain
Over the past few weeks, we have been reaching out to our clients as well as hosting several virtual CFO Forums. Through those interactions, our clients in the health care sector have been painting a grim picture of the financial effects of the coronavirus. … READ MORE >
Government devotes another $484 billion in aid, much of it for small businesses. But it may not be enough.
Aid to small businesses and hospitals comprise the bulk of the $484 billion aid package put forward by Congress and the Trump administration on Tuesday to mitigate the economic fallout from the COVID-19 public health emergency. … READ MORE >
Existing home sales declined 8.5% in March as headwinds grew
Existing home sales fell to 5.27 million in March, down 8.5% from the 12-month high set in February of 5.76 million. While most economists expected a decline as the economic toll of the coronavirus set in, March was still a strong month. … READ MORE >