Welcome to Thoughts on the market. I'm Michael Zezes, head of Public Policy Research and Municipal Strategy for Morgan Stanley. Along with my colleagues bringing you a variety of perspectives, I'll be talking about the intersection

between U.S. public policy and financial markets. It's Wednesday, March 25th at

11 a.m. Eastern. Congressional leaders today announced a record-breaking level of

fiscal stimulus and aid to deal with the crisis caused by the coronavirus.

Details are still forthcoming and could change, but here's what we think we know.

At roughly $2 trillion or about 10% of US GDP,

the bill would provide direct cash payments to taxpayers,

extended unemployment benefits, a boost to Medicaid,

forgivable loans to small businesses, direct aid to municipalities and hospitals, and loans to larger companies that are acutely affected by the reaction to the spread of COVID-19.

Simply put, there's a lot going on in this bill that aims to help all Americans with social, economic, and health issues.

And so it's fair to say that whether or not it works is going to be a judgment across all those lines.

From the very narrow perspective of its impact on the economy, it certainly doesn't fix everything,

but we do think it will help make sure the coming sharp U.S. recession won't be a prolonged one.

Remember our two-pronged tests for sufficient stimulus.

First, does it substantially limit the risk that people and businesses will run out of cash because of the virus?

We think it does.

Small business loans are sizable and forgivable if businesses don't lay off employees.

Loans to larger affected companies are available too, albeit with conditions on stock buybacks

and executive compensation.

And for individuals, the bill would send checks to most Americans and expand

unemployment coverage. The second test was does it build faith in a quicker economic

recovery? We think it does. It's likely a record-breaking stimulus number.

...