COVID-19: markets are overly sanguine

We think the greatest COVID-19 uncertainty facing policymakers and investors is what measures are necessary for the next year, after the initial peak and lockdown, to avoid repeated waves that overwhelm health services. In turn, that will determine the amount of economic activity that’s curtailed and the structural damage that is caused.

The impressive initial policy response from central banks and governments has supported asset prices and given investors increasing hope that we’re through the worst of the market drawdown.

We think that places too much confidence in when economies can reopen and to what degree. To understand why, see my latest Bloomberg interview – by phone, of course, to respect social distancing!