Treasury Secretary Steven Mnuchin told CNBC on Monday there will be a surge of demand for stocks once the coronavirus threat abates.
“There will be a huge amount of pent-up demand when this is done. And it will be done,” the Treasury secretary told CNBC’s Jim Cramer.
“Look for companies that have a ton of liquidity. An Apple will have customers,” Mnuchin added. “That’s just a given. The goal is not to bail out companies.” Cramer read the comments he got from Treasury Secretary Mnuchin on CNBC Monday morning.
His comments came minutes before what’s expected to be another swoon on Wall Street, with markets set to open down about 10%. Dow Jones Industrial Average futures were off by more than 1,000 points, triggering the limit down level. S&P 500 and Nasdaq 100 futures were also at their downside limits.
The SPDR S&P 500 ETF Trust (SPY) — which tracks the S&P 500 — plummeted 10% in the premarket, signaling that a “circuit breaker” will be triggered shortly after the regular session starts. Before Monday’s moves, both the Dow and the S&P 500 were down more than 20% from their respective intraday records hit in February.
But Mnuchin also reassured Cramer that he believes the nation’s largest banks will be able to handle this market downturn unlike that which occurred in the 2008 financial crisis.
“The banking system can handle this after the Fed’s actions. Now it is a question of liquidity for those who need it… To keep entities from closing … and help the working person,” he said. “Our stimulus is designed to let small businesses keep people on payroll… we’ll always be thinking about what happens after we get through this.”
He also lauded the Federal Reserve and its decisive action to cut U.S. interest rates to zero.
“The Fed is ahead of the issues and I’m grateful; nobody has to pull money out of the banks,” he said. “Liquidity for small businesses is chief priority. … Restaurant and bar owners, for example – we’re trying to get money to them to tide them over.”
The Fed said on Sunday that it cut interest rates down to basically zero and launched a massive $700 billion quantitative easing program. President Donald Trump said he was “very happy” with the announcement, adding: “I think that people in the markets should be very thrilled.”
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