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Apart from the fact that 26mm Americans are filing for unemployment benefits, things are not that bad from a market perspective. Thanks to the massive and relatively rapid monetary and fiscal policy response, COVID has not taken the S&P 500 down as much as the 2008 Financial Crisis did. At this point in the 2008 experience (start the sequence with 9/29/08, the first -5% move for the S&P), the index was down -17.6%. Now, (start with 3/9/20, the first -5% “crash” day), the S&P 500 is actually up +3.3%. So, based on the valuation for U.S. large cap stocks, this indicates a market view that the worst outcomes are off the table.

In the spirit of the Chinese curse, “may you live in interesting times,” we are certainly in the thick of it at the moment as efforts to contain the COVID-19 coronavirus to China have failed. There are now 140 countries that have reported infections and the weekend has seen the announcement of radical steps such as major U.S. cities (e.g. Chicago, IL; Los Angeles, CA; New York, NY) taking steps to sharply curtail public activities as the U.S. Centers for Disease Control & Prevention (CDC) has issued guidance that events involving 50 people or more not be held for the next two months...