Yesterday I had a great time speaking with Brad Smith on Cheddar TV about how the actions of the Federal Reserve and The US Treasury have shaped markets.

What the Fed & Treasury have done is nothing short of remarkable. The bottom of the business cycle is marked by widespread bankruptcies/defaults and with the Fed Programs – much of the business risk & liquidity risk is out the market, leading to a quicker recovery and higher assets prices.

The Fed & TSY department has injected Trillions into system through

a.       Opened window to non-financial companies

b.       Commercial Paper program

c.       US Govt Bond Buying Program

d.       Main Street Lending Program

e.       Started Buying Corporate bonds

f.        Started buying High Yield Bonds

This has removed a significant amount of risk from the market, these back stops & liquidity has created a cascade effect into risk assets. Its my opinion that the depth and length of this recession will be much smaller due to this. I would go as far as to say these actions also vitually assure some form of a v shaped recovery. Millions of Jobs have been saved, and many more will be back quickly, and now that economies are starting to open markets have taken note.

With higher asset prices it allows for allows the “wealth effect to stay in place” and we are starting to see that in the data with consumer confidence coming in with a pretty good number.