We’re now in the “belly of the beast”, at least according to NIAID Director Anthony Fauci and Surgeon General Jerome Adams, who warned that the prior week and week still ahead would likely be the most difficult stretch for Americans during the novel coronavirus pandemic. Glass half full: That could mean we’re halfway through the hardest part. Of course, there’s more work to do.

Last week we saw a promising trend continue: Policymakers are surveying the economic valley and backfilling where it’s needed and doing it quickly. In this unpredictable situation, fiscal and monetary action has, at least, proved quite reliable.

It was another week of large numbers, as the Fed announced $2.3 trillion in new and expanded lending programs, while the number of Americans seeking unemployment aid surpassed 16 million people. All the while, stocks posted a 4-day winning streak as policy measures appear to have gained the market’s approval.

That’s why, as we outlined in our quarterly commentary, we think the market’s expectations are now changing. We think markets are now looking for evidence that aid is proving effective, along with evidence that our efforts to starve the virus are working. Here are our views for the week that was, and the week that’s ahead.

WALL STREET WRAP

Federal Reserve Rolls Out Another $2.3 Trillion Backstop: The Federal Reserve on Thursday announced it would begin lending directly to businesses of all sizes and to cash-crunched states and cities as part of new $2.3 trillion lending program. The Fed has rapidly dug deep into its toolbox for emergencies and, at this point, is essentially providing liquidity in just about any market that needs it, including purchasing corporate bond ETFs to stabilize that market.

Speaking about the Fed’s emergency lending powers, Fed Chairman Jerome Powell said in a recent conference, “We will continue to use these powers forcefully, proactively and aggressively until we are confident that we are solidly on the road to recovery.”

The Fed will continue maximizing its capabilities in the weeks ahead; that much is crystal clear to us and markets. That’s exactly why we think the market is now expecting to see evidence these measures are working, as well as signs that science is winning the fight to contain or eliminate the virus.

Consumer Prices Fall: It may come as little relief, but prices fell slightly in March, largely due to coronavirus-related disruptions. The Consumer Price Index for March dropped 0.4 percent on a seasonally adjusted basis, the largest decline since January 2015. A sharp decline in gasoline was a major weight on prices during the month. The oil industry has been hit with a double whammy: a global price war, paired with a drastic reduction in travel around the world. Those combined forces have kept oil prices low lately.

Indeed, consumers have cut travel to such a degree that several major auto insurers announced last week they would return a portion of premiums to their customers.

Corporations See Early Signs of a Rebound: Although anecdotal, companies around the world say they are seeing green shoots of a recovery in China as strict lockdowns are slowly lifted.

In an earnings conference call Tuesday, Nike CEO John Donahoe said business had rebounded in China, even offsetting lost sales due to closures (the company’s digital sales also helped, growing 30 percent during lockdowns). Roughly 80 percent of Nike’s 7,000 locations in China have since reopened, including a store in Wuhan. Starbucks, Dow Inc. and Volkswagen are among other businesses opening facilities to workers and customers. China’s Ministry of Industry and Information Technology, which monitors cloud computing usage of 2.2 million businesses, said 76 percent of small- to medium-sized businesses had resumed work.

Keep in mind, China may be reopening but it’s still far from pre-COVID-19 normalcy. Wuhan residents need to use a smartphone app to track their health status. Schools are still closed in China. Airline and train employees are checking people’s temperatures as they board. Still, these appear to be steps in a positive direction.

Unemployment Figures Surge for Third Straight Week: The Labor Department on Thursday reported another 6.6 million unemployment insurance claims for the week ended April 4. That brings the total number of Americans seeking unemployment benefits to 16.8 million over the past three weeks. For context, the previous record for initial jobless claims was 695,000 in October of 1982. On Jan 31. Of this year, U.S. weekly initial jobless claims posted their lowest levels since 1969. This bear market has proven to be unparalleled in its pace to the downside; however, we believe the same could be true on the flip side if policy, medicine and science succeed.

THE WEEK AHEAD

This Week, More Economic Data Catches Up: This week we’re going to see the economic data catch up with the “new normal” as more stats from March trickle out.

For example, we expect to see some incredibly lumpy March retail sales when official figures are released on Wednesday. Consumer spending behaviors have dramatically shifted as nonessential businesses around the country closed, while those providing staple items saw sales surge. As noted last week, consumers are also shifting taking a large volume of spending online.

A host of other reports, from industrial production to housing starts, should help further measure the scale of disruption to various parts of the economy. We’ll also look to see if unemployment claims continue to rise at their unprecedented pace.

Commentary is written to give you an overview of recent market and economic conditions, but it is only our opinion at a point in time and shouldn’t be used as a source to make investment decisions or to try to predict future market performance. To learn more, click here.

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