Largescale repos, as it has been doing it goes on to describe the impact of the coronavirus on the economy the way it sees it, causing tremendous human and economic hardship, the statement says and measures to protect health have been causing the sharp economic declines and the losses in unemployment and jobs on the inflation front, the Federal Reserve notes, muted inflation, says weak demand and Lower Oil Prices are holding down inflation disruptions to Economic Activity, it says, have impaired the flow of credit the Public Health crisis will weigh heavily, it says, on Economic Activity and unemployment and just a bit of analysis picking on something that was just said there, there is no forwardlooking aspect to this statement here generally, the Federal Reserve says, this policy will lead to x, continued, sustained expansion. Things like that there is nothing here where the fed says the policies we have now will lead to x in the future its all about the fed chronicling the damage to the economy from the coronavirus, explaining that it will use tremendous tools to get back to where the economy was. But not forecasting when that will be or even characterizing how that will be tyler . What does that suggest to you, steve that they just dont know . That they dont want stope out on the edge of a long diving board . You nailed it, tyler. I think the outlook is as uncertain as it could as it can be i think the fed has all of the information that we have provided on an ongoing basis, as to the median estimates of wall street economists with a 35 or 40 downturn what the fed does say, and i would like to read this, because i think its it really speaks to how unusual the time is the ongoing publichealth crisi will weigh heavily on Economic Activity the committee will continue to monitor the implications of incoming information for the Economic Outlook, including information related to Public Health so theyre watching the spread of the disease, the hospitalization rates, the infection rates, the news about the drugs. Public health now is an absolute key to Monetary Policy all right, Steve Liesman. I know youll be hanging in with us for most of this half hour and then through the press conference, but some market reaction, lets bring in bob pisani hello, bob looking at the headlines here as steve has presented them. Hes right, theres no Forward Guidance at all. Ill tell you everyone i talked to on the trading desk, a little bit more on the pace of the bond purchases and i, covering etfs, i want to know a lot more about what theyre doing they made this announcement. We really dont have any details at all theyre going to be buying corporate bonds, corporate etfs, highyield etfs, as well and a lot of people in the etf business have been very interested for more information. And we really dont have it. Hopefully this will come up in the press conference but i have a sneaking suspicion that chairman powell wont provide a lot of details on the actual numbers frankly, theres a lot of questions here and im not sure that were going to get all of the answers today. The one thing im quite sure of is we have a very powerful rally going on in the last couple of days call it a combination of an opening of the economy rally, an expanded testing hopes, as well as today, better treatment you heard meg talking about that i just want to point out how much were getting an outperformance from the previously lagging sectors here. So heres the s p 500. The bank sector, the banks are doing great this week. Theyre outperforming dramatically, up 7, 8 , 9 were getting small caps outperforming. The russell 2000 hasnt been outperforming in ages. The small cap index. The s p midcap is up 10 the s p 500 is only up about 3 overall here so were really getting a broad rally. Today, we have almost 10 to 1 advancing to declining stocks. That means that this is not a f. A. A. N. G. Rally, folks. Were really broadening out for the reasons that i mentioned so, obviously, theres a lot of hope going on right now in terms of testing and advancement in the science. Guys, back to you. Its a great point, bob and of course, all of this early reaction still waits on the press conference were going to have around half past hour with chair powell lets check in on the bond market, first see how its responding to the statement and what its expectations are. Rick santelli here for that. Rick well, if you look at the intraday charts, look at the dollar index, weve given up a little bit of ground twoyear notes, were at 19. Tenyear notes, we were at 61, now 60 basis points. The point is, stocks have done so much to the upside, Interest Rates have come down and stayed down why are they down . Because the fed pretty much has set the table for anybody who needs some extra meals, but they still, as you pointed out, they really havent bought any etfs they havent really bought any munis. But those programs and just knowing that table is set seems to be doing the trick or treat but many want to know, what signals would the fed Pay Attention to, to maybe either pull back on some of these policies or programs or add more would they be looking at average hourly earnings. What part of the jobs report are they going to look at initial claims going down, because maybe some of the ppp policies are putting people back on the payrolls, like, what are the tells for the fed to move out of the zone of being the backside and this is what investors want to know, suffice it to say, while stocks rally, the fed has put Interest Rates in permanent ink for very little volatility and im not sure thats going to be changing anytime soon all right, rick, stick around michael schumacher, to pick it up. We think yields are too low, going up in the nearterm up and quite a bit more in the longer term and if you read the fed statement and think about what the fed has been doing over the last month, month and a half, its trying to buying bonds to make sure liquidity is there it doesnt seem to be trying to depress yields for their own sake, so we think that does set the stage for yields to go up. Not astronomically, but our call, for instance, at year end is that the tenyear goes to 1. 25 so we think thats in play and it wouldnt require too much of a shift in the fed stance to make that happen im glad you articulated what going up a lot looks like, because it could double from here and were still talking about 1. 25 does it stick around, mike what kind of recovery, what kind of economy do you think were going to have as we look out a year or two . Not very good for a long time, i think is the takeaway. And people can debate between v, l, u, w, who knows but when you have 26 Million People out of work, its hard to imagine a superfast recovery. Our Economics Team thinks its going to be a little more challenging than they thought initially. But even so, considering the backdrop of yields, having rates go up to 1. 25 , even a little bit higher, seems like its very feasible mona, what would you add on that when we talk about what the recovery will look like and what the stock market has already priced in. How much does the fed even play a role in that or is it just down to the science . Yeah, you know, its interesting. I think its going to be a very sectorspecific story. Its not a beta story and it really hasnt been if you look at yeartodate performance, the s p has really been driven by two Sectors Health care and technology those are really sectors that benefit in this postcovid environment. Whats really been lagging has been the cyclical value sectors, the energy, financials, parts of industrials that we talked about earlier. If we start to see more hope building around a real recovery, economic reopening, economic stabilization, you may start to see some of those cyclical sectors start to perform better and we saw a little bit of that just this week but generally speaking, when we look also at the more recessionproof defensive sectors, reits and utilities, they continue to lag, perhaps talking about or seeing that the peak fear of the recession is behind us. You know, we talk about positioning Going Forward in a postcovid work. We continue to like tech and health care, the stayathome or more stayathome economy does well, but we would like to balance that with a little bit of the financials and energy, but also a little bit more defensive. We like treasuries and gold still here, as well. David kelly, you buying gold . I think its something to think about longterm. Ive never said buy gold, but i am the thing that im most interested in is not so much what the fed does during this, what i think will be a ushaped recession. We know theyre all in and will keep rates low as long as we have an Unemployment Rate in the teen but if this economy comes roaring back in the second half of 2021, at what point will the fed say, we cant just accommodate fiscal largess forever. Weve got to be somewhat fiscally responsible if the economy is coming back, weve got to move out. And to me thats the really important question if we wait too long, we might end up with inflation, in which case gold, maybe equities. If we move quickly, the bond market may be in some trouble. I do like equities, real estate, even gold in this environment for the long run, just because rates wont stay this low once weve got a full recovery from this terrible recession. I was going to ask you about inflation, david and maybe you can elaborate just a little bit we think the really know whether the economy is going to heat up and come back quickly, strongly, a hot economy typically means inflation or can mean inflation. But the one thing you cant dispute is that theres a lot of money that has flooded this system a lot of money chasing goods, chasing services what are the odds we get into an inflation situation down the road, or do we just not need its not something we need to worry about right now, but maybe down the road . I think the odds are higher than we think. I mean, weve been weve tested the inflation bomb in the last 11 years and its never went off i think well have even more fiscal expansion, even more monetary expansion this time around and if we get a more rapid decline or a rapid decline in unemployment, enough momentum in the economy, then that could actually put up inflation. And one other thing. I want to see if the next government is a little bit more committed to dealing with inequality, whatever government we have at the end of this, because i think that the secret to keeping inflation low has actually been income inequality. If more money goes to middle and lowincome households, in a rebound, you could have demand outstrip supply and that could finally bring inflation back there has to be a limit as to how much money you put into the economy. And i think well discover that limit over the next few years. All right lets bring Steve Liesman back into the conversation. Steve, jump in i think david is talking about a lesson that the fed learned back in 08 and 09. And one of the hallmarks of that policy was really a push me pull you kind of policy, where they say, were wide open now, were going to be buying treasuries, were going to be buying mortgages, keeping rates at zero, but were very, very mindful of inflation, and were going to take this stuff back as soon as we possibly can. One of the lessons that central bankers learned back then, tyler, was that second part of that statement, the halting aspect of it, made policy less effective. I dont think youre going to hear that from powell today. I dont think youre going to hear that from many central bankers right now. The idea is that were wide open, were going to be buying all of this stuff for a very long time. And were not looking over our shoulder about the potential ghost of inflation tracking us down well have to handle that when it comes but were very long ways away from that. Not only that, tyler they were already thinking about letting the economy run a little hotter above 2 , even before the coronavirus hit. And michael schumacher, ill bring you in on that point, finally. You see the tenyear going to one and a quarter. That doesnt factor in much inflation, i would imagine thats right. N maybe a little bit, but not a heck of a lot. At this point, inflation will be a highclass problem so if the fed has to worry about that in six months or 18 months, thats a great thing so i think that the fed will be pretty tolerant of that Going Forward. All right thank you all today. Michael schumacher, mona, david kelly, well have more coverage throughout the hour as we get ready for fed chair Jerome Powell to host what will actually be a Virtual Press conference at 2 30 p. M all right, kelly. The other big story of the day, some positive results coming out of a trial of gileads coronavirus drug, remdesivir its helping to boost the markets in a big way today and meg terrell has the details. Hi, meg. Hi, tyler these were the results we were waiting for from a nih study a doubleblind of remdesivir, the Gold Standard. We were not expecting these results for another month, but we got them today from dr. Anthony fauci in an oval Office Briefing in just a little time ago. He told us this in this trial of more than a thousand hospitalized patients, they saw a 31 faster time to recovery for those on the drug, about 15 days taking remdesivir versus about 11 for placebo he also described a suggested survival benefit 8 of those on the drug passed away versus 11. 6 of those on placebo. And he called it suggested, because it wasnt yet statistically significant. The New York Times is reporting that the fda plans to announce as soon as today its providing emergency use authorization for this drug in the United States, citing a Senior Administration official and that matches up with what wed heard from dr. Scott gottlieb, who said he expects that authorization immediately based on these results the fda for its part says its been engaged in sustained and ongoing discussions with gilead, regarding making remdesivir available to patients as quickly as possible, as appropriate. Now, these are obviously very positive results, you guys there are other data coming out today. There was a lancet study of that stopped china trial that dont look as good however, that was stopped due to not being able to enroll enough patients so dr. Fauci saying their trial of a thousand patients that was completed is the Gold Standard and we could see this drug get emergency use authorization today. What do we know, meg, if that kind of authorization were to come through so quickly, what do we know about gileads ability to produce in sufficient quantities and distribute to the patients who could benefit thats a really important question, tyler. So the company has said it hopes to be able to supply 140,000 treatment courses by the end of may. Based on a tenday treatment duration, but they also put out their own Study Results this morning showing a fiveday treatment course did appear similar. So that could double the supply to 280,000 doses now, thats by the end of may. Thats a couple of weeks potentially to getting up to that supply. We dont know exactly where it stands with gilead right now and they did say they plan to make that supply available at no cost, guys thank you very much, meg. Meg terrell. And gilead shares up a little more than 6 right now, tyler. Thanks coming up, well take you to a very different kind of fed News Conference but there will be jay powell and reporters asking questions it will be a Virtual Press conference in about 13 minutes time but first, new questions about how companies can spend their ppp money and a new bright spot for housing amid some dreary data stay with us for updates on both across america, Business Owners are figuring things out. Finding new ways to serve customers. Connect employees. And work with partners. Comcast business is right there with you. With a network that helps give you speed, reliability and security. And enough bandwidth to handle all your connected devices. Voice Solutions Like remote Call Forwarding and readable voicemail. And safe, convenient installation. When every connection counts, you can count on us. Get the connectivity your business needs. Call today. Comcast business. Welcome back heres a check on your markets were a little off session highs after the fed decision dow hanging on to a gain of 2. 2 thats 530 points. Russell 2005 small caps having an insation session. Many Small Businesses are tapping ppp round two for cash to keep their companies going. But they want more flexibility on how they can use the funds. Kate rogers has that story for us kate hi, kelly, thats right many Small Businesses are still in waitandsee mode over this funding. But as cash is making its way to main street, there are more questions now cropping up from small Business Owners over when and how they should use this money. Advocatesy groups report their members are worried about the time frame for forgiveness, with some pushing for more flexibility. Borrowers have eight weeks of receiving their loan disbursement to bring back staff in order to qualify for forgiveness, but businesses fear they may run out of cash as soon as they get if shelter in place orders and mandated closures are extended the fine print still very much a work in progress last hour, the sba sending out a new notice to lenders, essentially saying that it will close etran, which is the application system that banks use to submit these loans to the sba for an eighthour window tonight. To all lenders with more than 1 billion in assets, theyre basically saying to ensure smaller lenders and their b