This evening, the Federal Reserve dropped the discount rate to 0%-.25%. The FOMC met this weekend and have cancelled the planned meeting later this week.

I’m not extremely surprised; however it’s not going to fix the underlying problem.

As I type this, the futures markets are limit down effectively across the board. With an almost 10% up day on Friday, I expect we will see the next leg down starting tomorrow.

Fiscal stimulus is certainly on deck soon, however I’m not sure it will do much to mitigate the downward pressures that we are experiencing due to the Coronavirus. Once a fiscal package is passed, I expect it will provide a near term rip higher, but that’ll be short lived.

As of right now, the FOMC is holding pat on not going to negative rates. The Fed is very likely going to expand QE is a material way, this is just the first step.

Fox Business asked a great question that the Fed chair dodged expertly on the call regarding buying “other assets” simply stating that they do not yet have the legal authority, and are not asking for it yet.