Happy Friday and welcome back to On The Money, where we’re thankful that Wall Street closes for the weekends. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
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THE BIG DEAL–Stocks have worst week in a decade on coronavirus fears: The stock market closed out its worst week since the 2008 financial crisis on Friday as fears of a coronavirus pandemic took root.
The market drop and the economic softening it portends could spell trouble for President Trump, who is counting on a strong economy to propel him to a second term, and who has frequently touted market performance.
The Dow Jones Industrial Average dropped 357 points on Friday, a loss of 1.4 percent, while the S&P 500 was down 25 points, or 0.8 percent.
The drop brought the total weekly losses for the Dow to more than 12 percent.
“Investors have largely been caught off-guard by the serious and far-reaching economic consequence of the coronavirus,” said Nigel Green, CEO of the deVere Group.
The outbreak, he said, would hit global supply chains, economic growth and government revenues.
“Until such time as governments pump liquidity into the markets and coronavirus cases peak, markets will be jittery, triggering sell-offs,” he added.
The Hill’s Niv Elis explains why here.
Fed chief hints toward rate cut amid Wall Street coronavirus rout: As stocks plunged again Friday, the chairman of the Federal Reserve sought to staunch the bleeding.
Fed chief Jerome Powell said Friday that the central bank will likely take action to boost the U.S. economy amid the steep stock market selloff triggered by the coronavirus outbreak.
“The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity. The Federal Reserve is closely monitoring developments and their implications for the economic outlook. We will use our tools and act as appropriate to support the economy,” Powell said in a Friday statement.
- Powell’s unplanned comments come as the Fed and its chairman face growing pressure from Wall Street to halt its worst week of losses since the depths of the financial crisis in 2008.
- Traders have been clamoring for the Fed to step in and cut interest rates before its upcoming March meeting after all three major U.S. stock indexes plunged Thursday into a correction.
- Gregory Daco, chief U.S. economist at consultancy Oxford Economics, said in a Friday tweet that Powell’s statement represented “forward guidance aimed at preventing further tightening in financial conditions.”
Powell’s comments may also get President Trump off his back as he complains, as expected, about the Fed’s impact on the U.S. economy.
“I hope the Fed gets involved, and I hope they get involved soon,” Trump told reporters a couple of hours after Powell’s statement Friday, asking the central bank to follow its global counterparts.
“They’re all going in, they’re all putting in a lot of money. Our Fed sits there, doesn’t do what they’re supposed to do,” Trump said. “They’ve done this country a great disservice.”
Even so, Trump’s top economic adviser expressed confidence that the U.S. economy and stock market will quickly rebound from the coronavirus.
“The virus is not going to sink the American economy. What is or could sink the American economy is the socialism coming from our friends on the other side of the aisle,” said Larry Kudlow at the Conservative Political Action Conference (CPAC). “That’s the biggest fear that I have today.”
“You might think about buying the dip,” Kudlow continued.
He made similar remarks in a Monday evening interview with The Washington Post, advising investors to consider “buying these dips” as the stock market fell from record highs. The Dow Jones Industrial Average, S&P 500 Index and Nasdaq composite have all dropped roughly 8 percent since Tuesday morning.
LEADING THE DAY
Republicans growing nervous about 2020 economy: Republicans who have been counting on a roaring economy to power President Trump and GOP congressional candidates on Election Day are growing nervous because of the economic havoc wreaked by the coronavirus.
Earlier this month, GOP senators were riding high after Trump’s acquittal on impeachment charges in the Senate. Now they’re wrestling with predictions of an economic slowdown that could upend the political calculus for 2020.
“There’s a potential to really affect the economy, not only this country negatively, but throughout the world,” said Sen. John Boozman (R-Ark.), adding that GOP colleagues discussed the potential fallout from the coronavirus at an all-day retreat in Washington on Wednesday.
The Hill’s Alexander Bolton has more on the GOP anxiety here.
Mulvaney: New tax cuts are top second-term priority for Trump: Acting White House chief of staff Mick Mulvaney on Friday said a new round of tax cuts would be a top priority for President Trump if he gets reelected.
“We need to do the second part of the tax bill. We really do,” Mulvaney said at the annual Conservative Political Action Conference.
- Mulvaney said Trump wants to further lower the corporate tax rate, cutting it from 21 percent to 20 percent. The president’s 2017 tax law slashed the rate from 35 percent to 21 percent.
- “He’s never liked the fact that the corporate tax is 21 percent. He always wanted it to be 20,” Mulvaney said about Trump.
- Mulvaney also said the White House wants to make permanent the parts of the 2017 law that have expiration dates. Most of the tax cuts for individuals expire after 2025.
The Hill’s Naomi Jagoda has more on the proposal here.
ON TAP NEXT WEEK
Tuesday:
- Treasury Secretary Steven Mnuchin testifies before the House Ways and Means Committee on the Treasury Department’s fiscal 2021 budget request, 9 a.m.
- The Supreme Court holds oral arguments in Seila Law vs. the Consumer Financial Protection Bureau, a case challenging the constitutionality of the CFPB, 10 a.m.
- A House Small Business subcommittee holds a hearing on online sales taxes, 10 a.m.
- A Senate Finance subcommittee holds a hearing on censorship as a non-tariff barrier to trade, 2 p.m.
Wednesday:
- A House Energy and Commerce subcommittee holds a hearing on online sales of counterfeit products, 10 a.m.
- Treasury Secretary Steven Mnuchin testifies before a House Appropriations subcommittee on the Treasury Department’s fiscal 2021 budget request, 10 a.m.
- A House Financial Services subcommittee holds a hearing on trafficking and the financial services system, 10 a.m.
- The House Small Business Committee holds a hearing on the benefits of blockchain technology for small businesses, 11:30 a.m.
- A House Financial Services subcommittee holds a hearing on racial discrimination in the auto insurance industry, 2 p.m.
Thursday:
- The Senate Banking Committee holds a hearing entitled “Threats Posed by State-Owned and State-Supported Enterprises to Public Transportation,” 10 a.m.
GOOD TO KNOW
- Lawmakers are discussing a spending package that would provide between $6 billion to $8 billion to combat the coronavirus, a source familiar with the talks confirmed to The Hill.
- Sen. Elizabeth Warren (D-Mass.), a Democratic presidential candidate, pressed the chief executives of five major U.S. banks on how they are preparing for the potential financial damage of the coronavirus outbreak.
- Bank of America is warning that global economic growth in 2020 will likely be the worst since 2009, in part because of the coronavirus outbreak.
- The rise of Sen. Bernie Sanders (I-Vt.) in the Democratic primary is unnerving K Street lobbyists and their clients.
- Seniors are coming to terms with the changes from a landmark new retirement law, the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which took effect in January.
ODDS AND ENDS
- The Federal Communications Commission (FCC) is proposing more than $200 million in fines against the country’s top mobile carriers after a lengthy investigation concluded T-Mobile, AT&T, Sprint and Verizon improperly sold access to their customers’ precise location information.
- Advocates are sounding the alarm over online scams that leave senior citizens particularly vulnerable, urging lawmakers and administration officials to take more steps to protect unsuspecting Americans.
RECAP THE WEEK WITH ON THE MONEY:
- Monday: Dow drops over 1,000 points on coronavirus fears | Trump asserts outbreak ‘under control’ as stocks plunge | White House to seek emergency funds | Housing advocates decry Trump budget cuts
- Tuesday: Stocks close with second day of steep losses | Dow falls over 800 points as coronavirus fears grow | Kudlow claims virus has been contained | US expects China to honor trade deal amid outbreak
- Wednesday: Coronavirus complicates Fed decision on rates | Schumer wants $8.5B in emergency virus funding | Dems offer bill to reverse Trump on military money for wall
- Thursday: Stocks plummet into correction over fears of coronavirus spreading | GOP resistance to Fed pick Shelton eases | Sanders offers bill to limit tax breaks for retiring executives