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Alternative Market Briefing

Fund managers join central bankers in call for fiscal response to virus woes

Wednesday, March 11, 2020

Bailey McCann, Opalesque New York:

Fund managers are joining central bankers in the push for a fiscal response to the economic uncertainty surrounding coronavirus.

Markets rebounded slightly on Tuesday, after plunging on Monday's news that the virus had worsened in Italy and the US. Sector analysts are predicting weakness in most sectors of the economy as the market realizes that the impact of the virus will extend well beyond global supply chains.

While the US Federal Reserve responded with an emergency 50bps interest rate cut, the central bank has noted that monetary policy can only go so far. Central bankers worldwide called on governments to facilitate a swift and sweeping response to the virus, both to help contain it and mitigate the economic impact. Fund managers and financial firms have also echoed the need for a strong fiscal stimulus package alongside comprehensive viral mitigation efforts.

The BlackRock Investment Institute released a note on Tuesday entitled, "Time for policy to go direct" which argues that if the government wants to avoid a recession it will have to choose vast and decisive stimulus. "Authorities in all major economies have to fast-track sizeable, comprehensive and flexible support programs to preemptively provide direct financial support to companies and households facing a short-term loss of income. That would prevent these temporary disruptions from turning into a full-blown global recession. Deploying the......................

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