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Huge New Virus Rescue Plan

Logo - The Daily Drill - Digging Deep for precious metal news

NEW YORK, April 9 (Reuters) - U.S. stock index futures rose on Thursday, along with yields on Treasury securities after data showed jobless claims surged another 6.6 million last week and the Federal Reserve rolled out a broad $2.3 trillion effort to bolster local governments and small and mid-sized businesses.

The Fed said it would work through banks to offer 4-year loans to companies of up to 10,000 employees and directly buy the bonds of states and more populous counties and cities to help them respond to the health crisis.

In announcing what may prove its most groundbreaking step in the crisis fight, Fed chair Jerome Powell said the Fed's role had now broadened beyond its usual focus in keeping markets "liquid" and functioning, to helping the United States get the economic and financial space it needs to fix a dire health emergency.

Powell is scheduled to make separate comments at 10 a.m. eastern.


“The jobless claims were more than expected, but futures have since turned positive. The reason is the Fed just released details of its $2.3 trillion to aid the economy. Futures were down now they’re up.”

“The jobless claims number was widely expected, and this is going to continue for a few more weeks. The real question is how many of these job losses are permanent? That’s why the market is not really being spooked. The fact that the Fed came out with details is cushioning the market.”

“These are numbers you’d see in a steep depression or deflationary period. But how many of these people will get back to work? We don’t know that until we know how long it will take to open up the economy and how badly corporate America has been damaged. It’s too early to come to any conclusion.” DEV KANTESARIA, FOUNDER, PORTFOLIO MANAGER, VALLEY FORGE CAPITAL MANAGEMENT, WAYNE, PENNSYLVANIA

“I would say that with the additional stimulus program, certainly the Federal Reserve and the U.S. government are willing to go to extreme lengths to support the economy and that has been far beyond my expectations. I think that provides very nice protection for equity holders.”

“We know that the numbers are going to look awful. And we have to look forward, to see what the recovery will look like. “

“I don't focus too much on whether it's down 5 million jobs or down 6 million jobs, I'm trying to look forward here as to whether we're going to have a V shaped recovery or a U shaped recovery or if we're going to have significant and permanent job losses.” GARY POLLACK, MANAGING DIRECTOR FIXED-INCOME AT DEUTSCHE BANK PRIVATE WEALTH MANAGEMENT, NEW YORK

"This is a lifeline the Fed is throwing to the municipal bond market in an effort to help states and local governments. It's more of a cash-flow help, I think, for them."

"It's not going to resolve all the issues for municipal governments, but it's something, and at this point in time, something's better than nothing." GUY LEBAS, CHIEF FIXED INCOME STRATEGIST, JANNEY MONTGOMERY SCOTT, PHILADELPHIA “There’s a sink, a dishwasher and maybe a washing machine being thrown by the Fed at this point. This latest effort seems a little more focused on small business, expanding lending to main street and the paycheck protection program.”

“The more dynamic piece of the announcement is the muni liquidity facility, to offer quite a bit of liquidity to state and local governments. The $500 billion is quite material. The muni market has been a bit slower to bounce back compared to other fixed income markets and this is certainly going to accelerate that process.” JACK ABLIN, CHIEF INVESTMENT OFFICER, CRESSET CAPITAL MANAGEMENT, CHICAGO

“Having Jay Powell schedule a press conference at 10 am, an hour and a half after the claims number, suggested to me he needed to fight bad news with some good news. They are expanding, it sounded like to municipal, just to continue to ease liquidity concerns and ease some of the credit concerns, although they haven’t yet dipped into high yield.

"The problem is, of course, the Fed can only operate through capital market channels, and not as many small businesses, quite honestly, float that on Wall Street. We’ll have to see what Congress’ response is also.”


“Everyone expected this number. But we need to remember how historically unprecedented a number like this really is. We’re talking about (unemployment insurance) claims that are orders of magnitude higher than anything seen before. Just because we’re seen them three weeks in a row doesn’t somehow normalize the situation.

“This is going to culminate in the most historic job losses in very short order than we’ve ever seen before. We’re probably on pace to lose more jobs in April alone than we lost during the entire Great Recession. It’s important to keep reminding ourselves how unprecedented this is, even though it seems like everyone has become numbed to it after just three weeks of seeing these outrageously large numbers.” (Compiled by Alden Bentley)

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