COVID crash and the Fed bazooka
The S&P fell 34% in 33 days. The Fed cut rates to zero, announced unlimited QE, and — for the first time — began buying corporate bonds, including fallen-angel junk debt. Within five months, the market had recovered to all-time highs. The response defined the term 'Fed put' for the next two years.
The March 2020 policy response was, in real terms, larger than the entire 2008 bailout, delivered in roughly one-tenth the time. The consequences — the crypto bubble, the housing bubble, the 9.1% inflation of 2022 — took another two years to show up. They are still being worked through.
09 · COVID & Crypto Winter
COVID produced the fastest bear market in history — the S&P 500 fell 34% in 33 days — and the fastest recovery, powered by a $5T Fed and Treasury response. Two years later, the same liquidity bubble that drove the recovery unwound in crypto. Luna/UST lost $60B in three days. FTX — once valued at $32B — turned out to be a fraud. The Nasdaq fell 33%.
Read the full era →