The link above shows the extreme and extensive measures taken by the Fed this week, and the extraordinary acceleration in the Fed balance sheet.
There’s much more to come.
Jim Rickards analyses the The CARES Act, in the link below. The Act adds $425BN more for the Fed balance sheet, which the Fed can leverage 10 times for another $4 trillion plus!
Corporate balance sheet and stock price manipulation became the game in recent years. In my opinion it is clear from the link below that the behaviour of Boeing MMM, Mcdonald’s and Caterpillar was heavily oriented to using tax cuts, their balance sheet and buybacks to boost the stock price to record levels rather than try to address persistently declining revenue growth. Different forms of this behaviour has been widespread and I doubt it can be repeated. I believe this is a great example of the distortion it has created and it will take time to work out.
Sven Henrich has a great update of the chart dynamics:
Needless to say, this is still a highly unpredictable situation and we will have to take it day by day until we have more clarity. Growth is expected to decline by 10% or more in Q2 2020, and is very uncertain thereafter, but policy support is going to the max at record speed. These forces are extreme and currently in opposition.