Insights: Market Sentiment

Top News:

10/12: Recent consumer spending data suggest China may be “first in, first out” from pandemic recovery among major economies.  In stark contrast, U.K. unveiled a three-tier lockdown system in order to stem rising infections.

10/13: While U.S. inflation remained muted in September, cautious commentary on economic outlook from two banking behemoths attracted attention.  Temporary setbacks (here, here) on the pharmaceutical front against Covid also restrained market bulls. Across the Atlantic, European markets were weighed down by U.K.’s disappointing jobs report and souring investor sentiment in Germany.

10/14: While September wholesale prices jumped due to a rebound in leisure-related services, overall inflation remained quite low. Hopes for a follow-up stimulus before the election have all but faded, for now.

10/15: Signaling a stalling recovery in employment, latest weekly jobless claims rose to a seven-week high.  Restrictive schemes reimposed by key European nations cast a pall over an already tentative recovery, prompting the ECB president to say “if more is needed because the situation deteriorates, then we will do what is necessary.”

10/16: U.S. retail sales grew at an unexpectedly strong 1.9% in September, even as concerns linger as to whether such momentum can be sustained in the face of resurgent infections.  October’s preliminary reading of consumer sentiment rose, as current concerns were offset by “continued small gains in economic prospects for the year ahead.” A joint US-German vaccine seems on track for FDA’s review for emergency use by late November. 

Heard on the Street:

“I actually think owning 25% gold isn’t crazy right now. Nor do I think owning 25% cash is crazy… I don’t think people fully understand how many business closures there’s going to be in the next few months… It will be quite a pleasant experience to not be in the car on the first wheel of the roller coaster that’s coming. I just want to be very low risk right now.”

— Jeffrey Gundlach, CEO of DoubleLine Capital, in an interview with Real Vision on 10/9/2020

“If they don’t pass some sort of bill quickly, how many businesses will go under, how many missed payments will we see on rent, debt service, and utilities? The next few months are really critical. I’m quite amazed that there’s quibbling over a hundred billion dollars here and there with so much at stake.”

— David Rosenberg, president of Rosenberg Research, as quoted by MarketWatch on 10/10/2020

Longer Game:

In its continuing push towards a cashless society while maintaining centralized control, China’s central bank gave away $1.5 million of its nascent digital currency in pilot programs.

Bonus:

While upgrading its 2020 estimate, IMF updated its 2021 global GDP growth forecast to a slightly lower rate of 5.2%, citing persisting economic disruptions. Meanwhile, OPEC also ratcheted down its oil demand expectations for next year. 

Top News:

10/05: U.S. service sector exhibited strengthening recovery for a fourth straight month in September.  In Eurozone business activity, by contrast, weakness in the service sector contributed to a meek increase.  Averting a looming deadline, Brexit negotiators agreed to an additional month of talks.

10/06: Fed Chair Powell again advocated for aggressive fiscal and monetary stimulus.  Nevertheless, any additional congressional stimulus plan appears dead, for now. Elsewhere, antitrust reform of U.S. tech behemoths also garnered attention.  Finally, a leading joint U.S.-European vaccine candidate will undergo an expedited “rolling review” by the European authorities.

10/07: After numerous false starts, investors pinned their hopes on piecemeal fiscal relief bills.  Eli Lilly has applied for emergency authorization of its Covid treatment.

10/08: Weekly jobless claims dipped to a post-pandemic low, albeit still quadruple the pre-crisis average.  An Administration official suggested vaccine trial data may be ready for government review by Thanksgiving.  Regeneron has also requested FDA approval of its Covid treatment in emergency use.

10/09: Conflicting signals aside, hopes for a more comprehensive fiscal recovery bill were rekindled.  Gilead’s Covid treatment shortened recovery time, according to final results published in the New England Journal of Medicine.  U.K.’s tepid August GDP growth proved worrisome, given it has subsequently tightened Covid-related restrictions.

Heard on the Street:

“One of the theories around the current context for markets is that a lot of it is quite dependent on ever-lower real interest rates… .  One of the big concerns I would have is that investors have allowed … their portfolios … to get sucked into an ever smaller vortex of recent winners … in the assumption that the future looks a bit like the recent past… .  However, history is littered with examples of changes.”

— Will Hobbs, Barclays’ CIO, as quoted by CNBC on 10/7/2020

“I don’t see really significant, anomalous valuations in the market, and that takes me to this idea of staying invested, being diversified, but not being too tactically adventurous.”

— Joseph Little, chief strategist at HSBC Global Asset Management, as quoted by MarketWatch on 10/9/2020

Longer Game:

While still anticipating 3Q U.S. GDP growth to “reverse much of the 31% annualized decline from the second quarter,” a survey of 52 business economists shows lower annual forecasts of -4.3% and +3.6% for 2020 and 2021, respectively.

Examining the disconnect between Wall Street and Main Street, economist Kenneth Rogoff expects higher corporate tax rates and other populist pushback on the horizon, unless there’s a “broad-based recovery in both health and economic outcomes.”

Bonus:

How do U.S. elections look from abroad?  According to a polling of 30 Asia-based market analysts, 11 are expecting a contested election, prompting a clear majority to increase cash levels and other safe-haven assets, including gold.

Top News:

9/28: The U.S. has reportedly tightened restrictions on exports of key semiconductor supplies to China, thwarting the latter’s ambition in achieving technological autonomy.

9/29: Snapping a two-month downward streak, consumer confidence bounced back sharply to a post-pandemic high in September.  House Democrats are slated to discuss its newly-unveiled $2.2T relief bill with the White House.  In Europe, negotiations have resumed in a last-ditch effort to avoid a no-deal Brexit.

9/30: A trio of upbeat economic releases (here, here and here) helped assuage investors’ indelibly bitter aftertaste from the “incongruously small and unbefitting” presidential debate.  Recovery in China’s overall economy  continued to pick up steam in September.  In a move similar to the Fed, the ECB is undertaking a “strategy review,” in light of heightened concerns over deflation.

10/01: Rumors swirled around the fate of the follow-up economic stimulus bill mired in last-gasp negotiations. While the weekly jobless claims report painted a recovering labor market, strains remained evident as at least 26.5 million Americans received benefits through various schemes.  U.S. consumer spending rose 1% in August, even as income fell 2.7% due to the expiration of unemployment supplement in July. U.S. manufacturing grew for the fifth consecutive month in September, albeit at a slightly slower clip.

10/02: September’s hiring pace moderated as unemployment rate stood at 7.9%, while revelation of the U.S. president’s Covid diagnosis compounded market uncertainty. The House passed a $2.2T economic relief bill, notwithstanding stalled bipartisan talks. 

Heard on the Street:

“I’m a monetary theorist. This is what I teach and study. This is unprecedented in 75 years, since World War II.  I think there’s a lot of repressed liquidity in the market that once the vaccine and the pandemic fears fade in 2021, we’re going to see a big boost in activity.”

— Prof. Jeremy Siegel, University of Pennsylvania, as quoted by CNBC on 9/28/2020

“Perhaps the only point worth mentioning is that the debate may have increased expectations for a contested election result. International investors have been prepared to entertain some extreme views on this topic (just as they entertained extreme views on the future of the euro area in the past). Given the importance of international investors to U.S. markets, this may add volatility around the election.”

— Paul Donovan, chief economist at UBS Global Wealth Management, as quoted by MarketWatch on 9/30/2020

Longer Game:

Nouriel Roubini, nicknamed “Dr. Doom” by the media, dispelled the long-held myth Republicans are better than Democrats at economic stewardship and explained his choice in the upcoming election.

Bonus:

Medical researchers continue to make encouraging, incremental progress on both treatment (here) and vaccine fronts (here) against Covid-19.  However, for one frontrunning vaccine candidate in late trials, distribution to the general public is not expected until spring 2021.

Top News:

9/21: Investor sentiment was dampened by amplified election jitters over SCOTUS nomination (here), congressional impasse on yet another fiscal initiative (here), and threat of renewed lockdown in Europe (here).

9/22: Hitting an annual rate of 6 million, existing home sales rose 10.5% from a year ago, with median home prices benefiting from tightening inventory.  After weeks of decline, new Covid cases are growing by 5% or more in 29 states and D.C.

9/23: By one measure, economic activity in both Eurozone (here) and the U.K. (here) decelerated in September, particularly among consumer-facing industries due to resurgent Covid infections.  Johnson & Johnson became the fourth drugmaker to enter into Phase 3 clinical testing of its vaccine under U.S. government auspices. 

9/24: As demonstrated by the latest jobless claims report, prospects for a steady job recovery remain mixed.  Separately, spurred by accommodative rates, new home sales in August soared above an annual rate of 1 million for the first time since 2006.

9/25: In its attempt to re-ignite stalled negotiations, House Democrats are reportedly preparing a slimmed-down stimulus plan totaling $2.4 trillion.  In another signal suggesting a waning economic rebound, durable goods orders rose a modest 0.4% in August, 1.1% lower than expected.

Heard on the Street:

“We think high-yield, dividend-paying stocks pose a huge opportunity for longer-term investors: quality, compounding companies with sustainable and growing dividends should be increasingly sought after in a world where income from bonds is so scarce.”

— Ben Kirby, portfolio manager at Thornburg Investment Management, as quoted by MarketWatch on 9/22/2020

“By serving as a backstop to key credit markets, our programs have significantly increased the extension of credit from private lenders…Many borrowers will benefit from these programs, as will the overall economy, but for others, a loan that could be difficult to repay might not be the answer. In these cases, direct fiscal support may be needed.”

— Jay Powell, Fed Chairman, in House testimony on 9/22/2020

Longer Game:

The re-framing of the Fed’s monetary guidance has caused consternation in some quarters; in a rare dissent from the central bank’s September decision, Dallas Fed President Robert Kaplan expressed his concerns for “building up excess risk-taking” by market participants.

The globalization of China’s financial markets continues as its government bonds are slated for inclusion in a major index, estimated to attract at least $100 billion in foreign investment flow.

Bonus:

The New York Fed’s Weekly Economic Index, comprised of 10 coincident indicators, hints at a slowdown in U.S. recovery since late August.

Top News:

9/14: Amid a flurry of M&A deals, (here, here, and here), investor sentiment was further buoyed by comments that one late-stage Covid vaccine may be available for distribution by year-end.  “Abenomics” may well continue after Japan’s former Prime Minister’s right-hand man, Yoshihide Suga, is all but assured to be his successor.

9/15: Presaging a demand shock owing to a second Covid wave, the International Energy Agency trimmed its outlook for worldwide oil demand by 8% year-on-year.

9/16:  The Fed maintained its dovish stance at its September meeting, with rate hikes not expected until 2023, at the earliest. Subsequent to the expiry of extended unemployment benefits, U.S. retail spending in August slowed, though rising 0.6% over July’s tally. Meanwhile, interim trial data from one pharma’s antibody treatment against Covid yielded promising results.  Globally, OECD said GDP will shrink by 4.5% this year, still 1.5% better than its June projection.

9/17: Six months after the Covid-induced employment crash, the latest weekly jobless claims report painted a stalling recovery picture.  The European CDC issued a warning on a resurgence in Covid cases on the Continent and the U.K. Synchronous with other central banks, both the Bank of Japan (here) and the Bank of England (here) left intact their loose monetary policies to keep the gunpowder dry in a “unusually uncertain” environment.

9/18: Initial September reading of consumer sentiment improved better than expected, while the looming election and vaccine progress were cited as two key risks.  An index of leading economic indicators for the U.S. showed that “this summer’s economic rebound may be losing steam.”

Heard on the Street:

“The Fed’s new inflation framework has not led to a new policy regime, or fresh action… This reinforces our view that, barring a new exogenous shock to the economy, or a fiscal policy error failing to bring fresh support to the recovery beyond the November elections, markets have seen the peak of Fed stimulus.”

— Lena Komileva, chief economist at G-Plus Economics, as quoted by MarketWatch on 9/17/2020

“So recently we have a retracement in the equity market. What was interesting is that gold was very resilient despite the equity’s pullback, suggesting that there’s ongoing buying support.  On top of that, gold is also a very attractive portfolio diversifier. I think a lot of investors have been piling into bonds and REITs (real estate investment trusts), so gold is viewed as an alternative to that, in case that particular segment gives you pressure.”

— Yeoh Choo Guan, head of ASEAN global markets at UBS, as quoted by CNBC on 9/18/2020

Longer Game:

Are we heading towards a bipolar world, anchored by two competing tech ecosystems, namely, Chinese autocracy vs. Western-styled democracies?  Axios highlights one such tech alliance between Europe, Japan, and the U.S.

One fallout from the Covid pandemic has been an accelerated “de-globalization,” both in rhetoric and in practice.  Some notable economists sound off on its ramifications.

Bonus:

According to Bank of America’s September survey of institutional investors, investment dollars flowed into industrials and small caps, as more respondents now believe we’re in an early growth cycle rather than a recession.

Top News:

9/08: Labor Day respite notwithstanding, investors resumed the sell-off in stocks as analysts warned of a near-term correction (here and here).  Moreover, renewed geopolitical and trade tensions involving China (here, here) also encouraged safe-haven bids on the U.S. greenback.  Meanwhile, a no-deal Brexit came into sharper relief as the U.K. was seen as reneging on terms of its withdrawal from the E.U. 

9/09: Undeterred by negative headlines pertaining to a vaccine in late-stage trials, in addition to stimulus talks mired in Congressional deadlock, investors paused a 3-day selling streak in a “technical” bounce.

9/10: U.S. jobs recovery through the summer may be tailing off as the latest weekly jobless report failed to show improvement in both new and continuing claims.  Pessimism grew about another coronavirus relief bill after a Senate version did not clear the chamber.  On a more positive note, inflation remains a distant concern, evidenced by one gauge of prices paid by businesses in the U.S. Across the Atlantic, the ECB decided to maintain its easing stance and stimulus program, despite its projection of a negative GDP growth of 8% in 2020.

9/11: Still well under the Fed’s 2% target, U.S. CPI increased 1.3% annually after gaining 1.0% in July.  While the U.K. economy expanded by 6.6% in July, its economic future may be muddied by the latest salvo in the messy Brexit saga.  For now, India and China have de-escalated their border standoff.

Heard on the Street:

“It’s not easy to find opportunities today… I think we’ve developed a real dichotomy between the things that are obviously successful but expensive, and the things that look low-priced but are challenged in terms of business. And big money will be made by buying the latter which works in my opinion.”

— Howard Marks, co-founder of Oaktree Capital Management, remarked on CNBC on 9/09/2020

“Everybody loves a party … but, inevitably, after a big party there’s a hangover.  Right now, we’re in an absolute raging mania… But I would say the next three to five years are going to be very, very challenging… The merging of the Fed and the Treasury, which is effectively what’s happening during Covid, sets a precedent that we’ve never seen since the Fed got its independence.”

— Stanley Druckenmiller, CEO of the Duquesne Family Office, in a CNBC appearance on 9/09/2020

Longer Game:

Noting that “market indices are measures of value creation for the owners of capital, which is not the same thing as value creation in the economy more broadly,” Michael Spence, a Nobel laureate in economics, enumerated winners and losers of the pandemic economy and beyond.

In an investment environment littered with short-term fluctuations, Morgan Housel of Collaborative Fund argues why “save like a pessimist, invest like an optimist” should be a long-term mantra.

Bonus:

The advent of a brave new world where AI and automation assume greater importance in our daily lives is unmistakable.  The Guardian challenged GPT-3, OpenAI’s language generator, to write a 500-word essay on why humans shouldn’t fear AI.  The surprisingly cogent edited result may shock you!

Top News:

8/31: Despite a dearth of U.S. macroeconomic news, mega cap tech firms led the NASDAQ to new record highs.  A leading indicator in China showed that business sentiment continued to improve in August. 

9/01: A U.S. manufacturing index showed recovery for a third straight month in July, even as industry executives are “holding off on capital investments for the rest of 2020.” Home prices in the U.S. saw an annual increase of 5.5% in July, due to “strong” demand and tight inventory.  Elsewhere, a similar uptick in manufacturing activity was reported in China in August. Finally, August’s projected negative inflation in the Eurozone area prompted speculation of additional monetary support from the ECB.

9/02: U.S. stock indices hit another all-time highs, despite the Fed’s Beige Book showing “modest” economic gains, not to mention news of fewer job gains than expected in the private sector in August.  Meanwhile, Australia became the latest country to fall into recession as of 2Q, although it is seen as better positioned for recovery. 

9/03: A gauge of business activity in the U.S. services sector declined sequentially in August, as the boost from the reopening of businesses and fiscal stimulus faded.  After days of record highs, profit-taking in an overextended market prompted NASDAQ to lead other indices lower by 5%.

9/04: A broader measure of U.S. unemployment, which includes discouraged workers and those holding part-time jobs, fell to 14.2% from 22.8% at the peak in April.  Nonetheless, observers remain cautious on the sustainability of further job growth.

Heard on the Street:

“The S&P 500 is in a long-term secular bull market. I just think we’re overdue for a bit of consolidation… If you’re long the S&P 500 right now, I would hold on. If you’re looking to put new money to work, I would wait for a bit of a pullback.  There’s going to be a massive amount of economic activity that happens in 2021.”

— Art Hogan, chief market strategist of National Securities as quoted by CNBC on 8/30/2020

“How much inflation is the Fed comfortable with?  The FOMC was surprisingly vague with respect to its inflation averaging framework, saying merely that it will aim to achieve inflation ‘moderately above 2 percent for some time’ following periods of undershoots. What does that mean in practical terms? We simply don’t know.”

— Aneta Markowska, chief economist at Jefferies, as quoted by MarketWatch on 8/29/2020

Longer Game:

Unprecedented monetary stimuli injected by the Fed, not to mention its recently announced policy revisions on inflation and unemployment, have distorted market valuations.  So much so that even pros on the Street are left bewildered by the full implications.

A shrinking middle class in the U.S., precipitated by well-documented income/wealth gap, has deservedly garnered much attention.  Bill Ackman, the outspoken founder of Pershing Capital Management, argued (pg. 11-13) that steps need to be taken to close the increasing inequality if capitalism is to be preserved as a system.

Bonus:

One can’t be blamed for feeling whipsawed by the daily market swings.  Here’s a list of 20 “must know” stats to help understand the broader picture of how we arrived and where we stand.

Top News:

8/24: Propelling the S&P 500 and NASDAQ to more record highs, investor sentiment was buoyed by developments in the arsenal against Covid, in spite of misgivings raised by some scientists (here and here).

8/25: U.S. and China restarted bilateral dialogue on thorny trade issues.  July saw brisk new home sales, due to pent-up demand from a shutdown spring season.  Nevertheless, investor bullishness was tempered as Conference Board’s Consumer Confidence Index slipped unexpectedly in August.  Separately, Eurozone’s powerhouse, Germany, saw improved business sentiment for the fourth consecutive month in August.

8/26: In July, U.S. manufacturing sustained a third straight month of recovery, evidenced by stronger than expected durable goods orders.

8/27: In a much anticipated major policy shift, the Fed revised its monetary approach by adopting an inflation target that “averages 2% over time” and by further emphasizing the importance of a “strong labor market.”  Meanwhile, both new and continuing weekly jobless claims declined modestly in the latest tally, confirming the painfully slow recovery.  Finally, July’s pending home sales were 15.5% higher annually.

8/28: Progress on more fiscal support for Americans impacted by Covid remains stalled.  Meanwhile, U.S. consumer spending and income increased in July, though momentum is likely to ebb as the pandemic lingers and fiscal stimulus dries up.  Across the Pacific, Japan’s PM Abe unexpectedly resigned for health reasons. 

Heard on the Street:

“In seeking to achieve inflation that averages 2 percent over time, we are not tying ourselves to a particular mathematical formula that defines the average. Thus, our approach could be viewed as a flexible form of average inflation targeting… In conducting monetary policy, we will remain highly focused on fostering as strong a labor market as possible for the benefit of all Americans.”

— Fed Chairman Powell in his Jackson Hole speech, announcing the Bank’s policy shift on 8/27/2020

“The Fed is focused like a laser beam on supporting the recovery and making sure they eventually get back to their 2% inflation target.  They won’t be tightening policy if inflation is below their target simply because the labor market is perceived as tight.  That was probably the most fundamental change that we saw.”

— Michael Darda of MKM Partners as quoted by CNBC on 8/27/2020

Longer Game:

Alarm raised over China’s ascendancy can partially be explained by concurrent concerns over the greenback’s fading luster as the world’s reserve currency.  Nouriel Roubini believes recent dollar weakness is “cyclical” in nature, while its inevitable demise may be “exaggerated.”

Bonus:

According to New York Fed’s Weekly Economic Index (WEI), based upon ten coincident indicators, the U.S. economy has rebounded. Should current conditions persist for an entire quarter, an annual GDP decline of 5.7% is expected, a marked improvement from a contraction of 11.5% at the end of April.

Top News:

8/17: Japan, the world’s third largest economy, reported a 2Q GDP contraction of 27.8% from one year ago.

8/18: On the heels of a notable turnaround in home-building activity, both the S&P 500 and NASDAQ  finished at record closing highs, marking the shortest bear market in history.

8/19: Minutes from the Fed’s July meeting warned that “ongoing public health crisis would weigh heavily on economic activity, employment, and inflation in the near term.”  Meanwhile, the mid-August trade meeting between the U.S. and China has been postponed indefinitely.  Across the Atlantic, consumer prices in the EU and the U.K. saw unexpected annual increases in July (a development yet to become a trend, however).

8/20: New applications for unemployment benefits climbed unexpectedly to 1.11 million, though continuing claims declined to 14.8 million.

8/21: U.S. existing home sales jumped to a seasonally-adjusted annual rate of 5.86 million in July, attributed to homeowners seeking larger homes as remote working takes stronger hold.  Concurrent with the release of additional trial data, Pfizer and BioNTech said their vaccine is on track for regulatory review as early as this October.  Reflecting a continuing cautious attitude and an uneven recovery path, one Eurozone manufacturing indicator came in below expectations for August. 

Heard on the Street:

“Stock market crashes happen as a direct result of overvaluation. I don’t think there are many people around right now that would argue against the fact markets are quite overvalued.  Maybe they’ll get more overvalued… this is the setup up for left tail events in stock markets.”

— Mark Spitznagel, founder of Universa Investments in a CNBC interview on 8/17/2020

“As the rebound in the economic indicators continues to gather pace, we think we have left behind the worst of the disinflationary pressures and that reflation is already under way.  Moreover, the recent rise in commodity prices and the depreciation of the U.S. dollar will also add to the inflationary pressures, particularly in the U.S.”

— Morgan Stanley economics research team on 8/18/2020 as quoted by MarketWatch

Longer Game:

Noting that the V-shaped recovery in the stock market appears predicated upon expectations of the Fed’s monetary support, James Montier of GMO characterized the current market sentiment as “extreme overconfidence, especially given the vast and imponderable questions that define today’s environment.”

Brazil, India, and South Africa, collectively representing more than 10% of global GDP, face “bleak” prospects of recovery from Covid-19 relative to other G-20 peers, according to one study.

Bonus:

Latest monthly survey of institutional investors by Bank of America revealed a plurality now believing the stock market to be in a bull phase versus a bear-market rally by a 46%-to-35% margin.

Top News:

8/10: Dubious legality aside, the U.S. administration took executive actions to ostensibly break political impasse over additional coronavirus relief.

8/11: U.S. wholesale costs rose more than expected in July, even though inflationary pressures remain tame.  Since peaking in late July, the five-day average of new Covid cases has slowed to 45K/day in the U.S.

8/12: U.S. consumer prices increased more than expected in July.  Nevertheless, the 1.6% annual increase is unlikely to trigger any Fed tightening.  The U.S. has expanded its vaccine deal with Moderna, conceivably delivering up to 500 million doses. Across the Atlantic, the U.K. registered a Q2 GDP contraction of 20.4%, officially sinking into a recession.

8/13: New weekly jobless claims fell below the 1 million mark for the first time since March, while continuing claims decreased to approximately 15.5 million.

8/14: Hopes for a break in the Congressional deadlock over additional fiscal relief were dashed as the Senate adjourned until September.  Meanwhile, U.S. retail sales, excluding auto, rose more than expected last month.  Separately, in July, industrial production rose in China while retail sales remained anemic, prompting concerns over the recovery paths for other countries.

Heard on the Street:

“The 1920s ended with a stock market meltup followed by a meltdown. The 2020s may already be seeing a meltup, begun on March 23. We live in interesting, though not unprecedented, times. The Roaring 1920s could be a precedent for the Roaring 2020s. As Mark Twain observed: ‘History doesn’t repeat itself, but it often rhymes.’”

— Ed Yardeni of Yardeni Research on 8/12/2020

“The labor market continues to improve, but unemployment remains a huge problem for the U.S. economy.  The number of people filing for unemployment insurance, both regular and PUA benefits, continues to steadily decline as layoffs abate. But job losses remain extremely elevated, far above their pre-pandemic level.”

— Gus Faucher, chief economist at PNC Financial Services, as quoted by CNBC on 8/13/2020

Longer Game:

Can central banks inject unlimited liquidity into financial systems?  Randy Kroszner, a former voting member of the Fed, noted that, “There is no limit on the ability of a central bank to create reserves, as long as someone is willing – or through government edicts, forced – to take them … The key question is the impact of that reserve creation on money supply and the demand for money.”

The Federal Reserve is experimenting and researching the feasibility of a digital currency.

Bonus:

Recent improvement in U.S. infection trends has been called into question: While the seven-day new case average has declined 19%, testing fell as well by 12% since 7/28.