According to official Chinese PMIs released over the weekend, the Chinese economy has taken bigger hit from the Coronavirus then it did during the 2008 financial crisis. The world’s second biggest economy came near a standstill and is operating at around or less than half capacity, depending on how you ask. Economists at a famous bank that goes by the name of Goldman Sachs now expect a “short-lived” contraction of the global economy in the first half the year before rebounding in the second half. That’s a base case where the virus is contained and then peters out. Last week it was reported that JPMorgan Chase will be testing the Fed’s discount window as to remove the “stigma” for ‘lesser’ banks. With the benefit of hindsight, we know now that the Fed is preparing for the worst – markets seizing up – and not for general reserve management purposes.
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