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The Fed has clearly gotten the message being sent from financial markets — "OMFG!!!" — and has acted accordingly.

The state of play: The U.S. central bank is responding to the coronavirus outbreak as if the country is in a crisis, first by declaring an emergency 50 basis point rate cut last week, and on Thursday by announcing $1.5 trillion in injections to the systemically important repo market, on top of already increased funding injections.

  • Congress and the White House are not on the same page and have committed what one former Fed official called "gross negligence" with their response so far.

Why it matters: A recession is starting to shift from possible to overwhelmingly likely with the only question being how bad things will get.

What's happening: "At best the Fed can buy time in the markets and put a floor in the selloff, but a fiscal response is required," Nela Richardson, investment strategist at Edward Jones, tells Axios. "This is a biological event. This problem did not start in the financial markets and the solution won't be found there."

  • Danielle DiMartino Booth, CEO of Quill Intelligence and a former adviser to the Dallas Fed, is expecting "crisis era" policies from the Fed, but Thursday's market selloff — the worst since 1987's historic Black Monday — shows just how limited the central bank is.
  • "The Fed loaded and fired a bazooka and it was not a big enough shock to stanch the bloodletting in the stock and more importantly, credit markets," she tells Axios.

Between the lines: The wave of red on Wall Street — the S&P 500 has fallen 27% from its record high, set just weeks ago — is not an assessment of the economy, Jim Paulsen, chief investment strategist at The Leuthold Group, says.

  • "There is no explanation for why the market is falling 5-10% a day," he tells Axios. "We’re not trading on any kind of reason or sanity, it’s just emotion and panic at the moment."

The bottom line: "The Fed will soon be largely sidelined," Mark Zandi, chief economist at Moody's Analytics, says in an email. "The onus for saving the economy from recession is now squarely on the Trump administration and Congress to provide a large, timely and well thought out fiscal stimulus."

  • Asked how confident he is it would get done, Zandi echoed the response of most economists who have spoken to Axios since the market meltdown began.
  • "Not confident at all. Recession is more than likely."

Go deeper: What the Fed has learned about the coronavirus outbreak

Go deeper

Dion Rabouin, author of Markets
56 mins ago - Economy & Business

The European Central Bank and the market's moment of truth

ECB president Christine Lagarde; Photo: Chip Somodevilla/Getty Images

The biggest event for markets this week will be Thursday's meeting of the European Central Bank's governing council and the press conference following it from ECB president Christine Lagarde.

Why it matters: With interest rates jumping around the globe, investors are looking to central bank heads to see if they will follow the lead of Fed chair Jerome Powell, who says rising rates are nothing to worry about, or Bank of Japan governor Haruhiko Kuroda, who has drawn a line in the sand on rates.

Mike Allen, author of AM
2 hours ago - Politics & Policy

Manchin's next power play

Photo: "Axios on HBO"

Sen. Joe Manchin (D-W.Va.), America's ultimate swing voter, told me on "Axios on HBO" that he'll insist Republicans have more of a voice on President Biden's next big package than they did on the COVID stimulus.

The big picture: Manchin said he'll push for tax hikes to pay for Biden's upcoming infrastructure and climate proposal, and will use his Energy Committee chairmanship to force the GOP to confront climate reality.

Why picking a jury for the Derek Chauvin trial is so hard

Illustration: Eniola Odetunde/Axios

The tough task of selecting a jury for former MPD officer Derek Chauvin's trial for the killing of George Floyd is set to begin Monday.

The state of play: "This case may be the most highly publicized criminal trial in a long time. ... That means that it's harder to find people who really have an open mind," Richard Frase, University of Minnesota Law School professor of criminal law, told Axios.