At some point soon I suspect shorting long-term Treasuries and going long stocks is going to be an amazing trade.
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Short-term catalyst: massive fiscal stimulus package. Would cause Treasuries to plummet, stocks to skyrocket. The further the market drops, the more likely Congress will act.
In this crisis, QE may not work. Whether it’s helicopter money or giving the banks cash for them to loan out, it’ll be hard to get people to spend money with the industries that will suffer most.
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I agree people won't spend stimulus money on cruises, plane tickets if they worry about getting sick and dying. But it can still offset a severe demand shock. The people fired from their jobs will happily spend stimulus checks on food, rent, etc.
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Also, QE =/= fiscal stimulus. Agreed that CB firepower is limited here.
End of conversation
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