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

Updated 25 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 4 p.m. ET: 31,175,205 — Total deaths: 962,076— Total recoveries: 21,294,229Map.
  2. U.S.: Total confirmed cases as of 4 p.m. ET: 6,829,956 — Total deaths: 199,690 — Total recoveries: 2,590,695 — Total tests: 95,121,596Map.
  3. Health: CDC says it mistakenly published guidance about COVID-19 spreading through air.
  4. Media: Conservative blogger who spread COVID-19 misinformation worked for Fauci's agency.
  5. Politics: House Democrats file legislation to fund government through Dec. 11.
  6. World: "The Wake-Up Call" warns the West about the consequences of mishandling a pandemic.

McConnell: Senate has "more than sufficient time" to process Supreme Court nomination

Senate Majority Leader Mitch McConnell (R-Ky.) said in a floor speech Monday that the chamber has "more than sufficient time" to confirm a replacement for Supreme Court Justice Ruth Bader Ginsburg before the election, and accused Democrats of preparing "an even more appalling sequel" to the fight over Brett Kavanaugh's confirmation.

Why it matters: Senate Minority Leader Chuck Schumer (D-N.Y.) has said "nothing is off the table next year" if Republicans push ahead with the confirmation vote before November, vowing alongside Rep. Alexandria Ocasio-Cortez (D-N.Y.) to use "every procedural tool available to us to ensure that we buy ourselves the time necessary."

House Democrats file legislation to fund government through Dec. 11

House Speaker Nancy Pelosi (D-Calif.). Photo: Chip Somodevilla/Getty Images

House Democrats on Monday released their proposal for short-term legislation to fund the government through December 11.

Why it matters: This is Congress' chief legislative focus before the election. They must pass a continuing resolution (CR) before midnight on Oct. 1 to avoid a government shutdown — something both Hill leaders and the White House have claimed is off the table.