To be fair, the scale of the 2008 global financial crisis\nwas unprecedented, and the Federal Reserve and Congress were working with virtually\nno playbook and \u201con the fly.\u201d No one knew exactly how to manage the most\ncomplex credit\/liquidity freeze the world has ever known. Some of the stimulus\nbore fruit and generated positive results, while other actions fell flat. At\nthe end of the crisis, however, a common refrain was that our institutions were\nessentially writing the playbook needed to battle the next crisis effectively and\nefficiently.<\/p>\n\n\n\n
Well, the next crisis has arrived, and the Federal Reserve\nand Congress waited just weeks (instead of months or years) to take actions\nthat far exceed the measures taken during the 2008 financial crisis. There was\nbasically no debate \u2013 as there was in 2008 \u2013 about whether or not the Federal\nReserve should offer lifelines to corporations or whether Congress should act\nto cushion households with cash payments and increased unemployment benefits.\nIt all just happened, and fast.<\/p>\n\n\n\n
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How Can You Survive this Crisis?<\/a><\/strong> If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today!\u00a0 ________________________________________________________________________<\/p>\n\n\n\n The Federal Reserve\nExpanded Its Balance Sheet Almost Immediately<\/strong><\/p>\n\n\n\n The Fed\u2019s current actions take\nit farther afield from its 2008 tactic of cutting interest rates progressively\nover time and buying government securities to inject liquidity into the\nfinancial system. In the current crisis, interest rates went almost straight to\nzero and the Fed deployed never-before-used tactics:4<\/sup><\/p>\n\n\n\n The hundreds of billions of\ndollars of liquidity available to help industry can also reportedly be\nleveraged ten times by the Fed through various lending facilities, which\nimplies an astounding $7 trillion of available funds \u2013 or almost 10 times the\nstimulus provided in 2008-2009 to fight the Great Recession. There are signs\nthe credit markets are already beginning to stabilize in the wake of Fed\naction. Large-cap companies like Oracle and CVS Health Corp. have borrowed\nmoney at a record pace, and in all some $104 billion of investment-grade bonds (a\nrecord) were sold last week \u2013 pointing to strong demand. The previous record\nfor investment-grade bonds was made the previous week, at $73 billion. Mortgage\nrates have also come down and even companies with higher credit risk, like\nCarnival Cruises, have been able to access the debt markets to raise cash.5<\/sup>\n<\/p>\n\n\n\n On the federal government side, I mentioned before that the\nAmerican Recovery and Reinvestment Act of 2009 committed some $800 billion of\nfiscal spending, which seemed like an exorbitant sum of money at the time.\nWithin weeks of the current crisis, Congress passed the $2 trillion CARES Act,\nwhich equates to 9.5% of GDP. There are other aspects of the bill as well\ndesigned specifically to help households:6<\/sup> <\/p>\n\n\n\n Bottom Line for\nInvestors<\/strong><\/p>\n\n\n\n While this\ntype of economic crisis is unprecedented, the fiscal and monetary responses to\nsupport the economy are also unprecedented \u2013 even when considering what the\nFederal Reserve and Congress did in 2008-2009. Alleviating\nthe hardship from job losses and maintaining liquidity in the financial system is\ncrucial, and for now, the government and central bank responses look adequate,\nin my view. <\/p>\n\n\n\n The wild card here is that with all of the stimulus deployed so quickly\nand profoundly, we have effectively increased the probability that a powerful\nwave of pent-up demand is ready to be unleashed once the virus is contained. Time\nwill tell when that moment arrives, but I\u2019m confident this fiscal and monetary\nstimulus will still be in the economy long after the virus is gone. <\/p>\n\n\n\n As we wait for the virus to pass and the economy to recover, many investors may be wondering what they can do now as we wait. In the meantime, I recommend that investors remain calm, focus on the long term and not let emotions take control of their investments. To help you focus on the fundamentals instead of the fearsome headlines, I am offering all readers our\u00a0Just-Released April 2020 Market Strategy Report.\u00a0<\/a><\/strong> If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today!7<\/sup><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" The current responses have been faster and more sweeping than the Great Recession moves<\/p>\n","protected":false},"author":3,"featured_media":7430,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[63,71],"tags":[],"class_list":["post-8591","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitch-on-the-markets","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8591","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=8591"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8591\/revisions"}],"predecessor-version":[{"id":10618,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8591\/revisions\/10618"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=8591"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=8591"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=8591"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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Many investors are wondering what they should do in response to this crisis and how they should respond to protect their investments. At the end of the day, I think the key for investors is to try and focus on the hard data. Bear markets do not last forever, in fact, they are generally much shorter than bull markets.
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I recommend that investors remain calm, focus on the long-term and not let your emotions take control of your investments. To help you do this, I am offering all readers our just-released April Market Strategy report. This report contains some of our key forecasts & factors to consider such as:<\/p>\n\n\n\n
IT’S FREE. Download the Just-Released April 2020 Market Strategy Report<\/a>2<\/a><\/sup><\/strong><\/p>\n\n\n\n![\"\"](\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/02\/Picture1-1024x430.png\")
Source: Federal Reserve Bank of St. Louis3<\/sup><\/em><\/strong> <\/figcaption><\/figure>\n\n\n\n
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This Special Report is packed with newly revised predictions that can help you base your next investment move on hard data. For example, you’ll discover Zacks\u2019 view on:<\/p>\n\n\n\n