The media fixation with equities has completely blinded it to what matters. The global economy is about to take an immense loss. Equites are going down with it, as they should. Nothing can stop that now.
But all that matters in terms of systemic risk is credit. That’s the Fed’s target. To unwind the dislocation in soverign debt so that government’s can get on with the fiscal support needed to save lives and mitigate the very worst of economc scenarios. So far, so good:
It will also aim to squash spreads for banks and corporations. More good news:
So far, so good for the Fed bazooka. And if it’s still not enough, it can just stand up and say “whatever it takes” which would push hedgies and others to front run bonds for it, doing all of the work.
Wherever you see a headline about Fed failure owing to falling equities, mark it down for the future as a stupid organ.