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Economic Data Deluge

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It’s St. Patrick’s Day, 2020 — and pre-market futures are wearin’ o’ the green this morning. This comes, of course, after a vicious Bloody Monday that saw our major U.S. indexes sold off 12-13%, including a near-3000-point drop on the Dow. Positive motivation, besides obvious sale prices on most equities, include reports of potential big moves from federal government agencies to make sure enough cash is available in the domestic economy.

Treasury Secretary Steve Mnuchin is asking Congress to pass what’s called a Phase Three stimulus agreement to add at least $850 billion of liquidity into the markets. These reportedly include a payroll tax cut and other measures to deal with the fallout of our current shut-in society which is costing industries and their employees massive amounts of money both now and into an indefinite future. It would be an historic measure to attempt to match historic times; compare this with the TARP bailout from the mortgage collapse, which amounted to $475 billion.

However, the Phase Two agreement, worth $100 billion, is still stalled in Congress awaiting a vote in the House. The bailout is experiencing some pushback from a handful of representatives. Phase Three is expected to be introduced to the Senate initially, which would require 60 yea votes to pass. This means it will require cooperation across the political aisle, which is what’s currently keeping Phase Two from being passed.

Even still, European markets were up 3% on the news. At this hour, the Dow looks to open up 500 points, the Nasdaq +170 and the S&P 500 +65. Yesterday, we broke below recent lows in late December 2018, and are now trading down to levels not seen since May 2017, the initial months of the Trump administration. With any luck (of the Irish*), stimuli to the market from our government agencies will help dig us out of this hole sooner than later.

Retail Sales for February fell to -0.5% from a +0.1% estimated and the +0.3% posted for the previous month. Stripping out volatile auto sales, these numbers ease a bit to -0.4% and ex-auto, retail gas -0.2%, again down from the +0.1% expected and +0.3% from January. Even though these metrics technically missed estimates, no one can be too surprised they’re under water considering our current global situation.

Industrial Production numbers for February bring slightly better news: +0.6% beat consensus by 10 basis points, and well ahead of the -0.3% reported a month ago.

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