Is it priced in?

What a week, eh? It feels as if my last dispatch at the beginning of the month was written a lifetime ago. The sell-off in equities was already severe by then, and I was in a buy-the-dip mood. My initial intuition proved correct; the rebound happened, as did the new low. My prediction of subsequent choppy sideways movement was brutally refuted, however, sell-off, a surge in volatility and dislocation across multiple markets to an extent not experienced the financial crisis. There are so many things we don’t know, so let’s start with the few things we do. Covid-19 is now morphing into a hit to the real economy not seen since the financial crisis. The virus’ foothold in Europe is strengthening, and country by country are now shutting down their economies in a desperate attempt to avoid the disastrous scenario unfolding in Italy. The U.S. and the U.K. are acting as if they’re somehow immune or different, I fear they aren’t. In any case, it is besides the point. The global economy is now in recession, and the scrambling action by fiscal and monetary policy is really just an attempt to prevent an economic shock turning in to a prolonged crunch with a wave of private sector bankruptcies and soaring joblessness.

Do you want to read the rest? Click here for the PDF.