If Congress doesn't act on the coronavirus aid package, BTIG's Julian Emanuel sees stocks plunging another 20% (via TradingNation)
If Congress doesn't immediately pass a coronavirus aid package designed to help the U.S. economy, he warns it'll spark more damage to an already battered market.
"We're in this situation where politics seems to be getting in the way," the firm's chief equity and derivatives strategist told CNBC's "" on Monday. "The politicians are playing with fire... If you wait long enough, you risk changing psychology incrementally more, and we all know between Monday and Friday, if anything, news in terms of the virus is likely to worsen.
The wrangling overshadowed the Federal Reserve's additional measures on Monday to help the markets. Not only did the Fed announce it will purchase more Treasuries and mortgage-backed securities, it also told investors it'd also buy corporate bonds and corporate bond exchanged funds in an unprecedented move"We were very happy with what the Fed did," said Emanuel. "But effectively, the Senate is canceling out the beneficial effects of the Fed's actions."level to watch is 1,764, a more than 20% drop from current levels. The index has already seen a 35% plunge from its all-time highs hit in mid-February.
"Given all the stimulus, given our view that ultimately the virus will come under control — however long it ends up taking — is that stocks start to represent pretty reasonable values," Emanuel said. "We think you should be tip-toeing in with the expectation that you could go lower."
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