Yes, ladies and gentlemen, sorry to break this out to you like this, but in all likelihood there will be a day after the covid-19 is defeated. Let’s try to assess where we’ll be after that.

For now, things look pretty bleak. The avidity of the buyers was extreme in the increase, so is the fear of the sellers in the down moment. World valuations are still very much inflated though. Main example of that is the strength of tech names. They outperformed any other equities in the bull market and the sell-off. Is that the new normal? I doubt it.

There might be a further slide to come then. The US market can’t stop dropping until there is a concerted and convincing reaction to the virus outbreak situation. So far, the response has been lethargic at best, and verging on the criminal at times. It is just kicking into gear as we speak. Stress is settling in and we might approach peak-stress no sooner than end of Mar20.

Depending on the rapidity of the response, there are 2 scenarii from now. Containment of a mostly seasonal virus by Jun20, 2 quarters of sad economic performance that would shave off up to 1.5% of global growth for the year. Happy days! More sombre scenario, is an unseasonal virus with case growth continuing into 3Q20, this time plunging the world into a longer-lasting recession.

We are far from there yet! Great crisis also means great offsets. Lower oil price means lower costs for airlines and travellers of all sorts. Tax rebates or any incentive measure means great compensation for lower activity. Cheaper credits translate in lower debt burdens. New capital could be deployed to modernize production capacity and develop new ways of working globally.

In the short term, spending more time at home with your loved ones won’t kill you…as long as it doesn’t last too long. The day after tomorrow, the sun is shining again, just make sure you stay safe in the meantime. Life is precious.

360 Advisory – Markets