Probably stupid to tweet this, and I do so with suitable humility knowing full well I could be totally wrong (no one really knows), but this really does feel like the bottom (for markets; not the economy/corona spread).
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When prices fall exponentially faster and faster, it is akin to an 'anti-bubble' - the inverse of climactic tops during bubbles, for much the same reasons in reverse. It is very characteristic of market lows.
Now I'll acknowledge many markets are still expensive. I'm still not fairly pessimistic on Australia for e.g. which is not only still expensive, but late cycle. But you can't ignore that bond yields are also at record lows and more CB stimulus is coming.
More specifically, steady state outside of short term liquidity stress, it is reasonable to expect valuations to settle out above historical averages given incredibly low interest rates & central bank bond buying. As equity valuations fall,% cash & bond weightings naturally rise
The outbreak has already peaked in China and is declining; China is a huge driver of the global economy; and in the West, while the economic fallout is just beginning from containment measures, those measures & voluntary social distancing will slow the pace of transmission.
Right now market is assuming economic fallout AND uncontrolled spread, but that seems to be a worse of all worlds assumption. Historical precedent also suggests the fallout from pandemics is usually measured in months/quarters not years.
Treatments are being worked on around the clock and some sources believe the first treatments to mitigate the worst symptoms could be available as soon as April. Investors are currently assuming no such treatments will emerge. Maybe they won't, but it's a major upside risk.
People are also leaping to second &order effects analogizing GFC. But while there are pockets of excess leverage, the debt is structured very differently to pre-GFC - most of it is long term, cov light, and very few banks & corporates are relying on short term paper these days.
Excluding private equity and pockets of high-yield debt markets, private sector debt has actually fallen in US & Europe over past decade. Govt debt has risen, but that's hardly a short term concern with rates at zero. Banks are in much better shape after a decade of derisking.
Lower mortgage rates & fuel prices will boost real consumer incomes, and lower base rates & more QE will only deepen desperate need for yield. While nothing can ever be ruled out, it seems vastly premature to assume we are going to have a debt crisis at this juncture.
Substantial fiscal stimulus is coming (even Germany is signing up); more CB liquidity measures; and record amounts of cash is sitting on the sidelines too paralyzed by fear to enter. That's temp not permanent; as soon as confidence stabilises markets are likely to rip higher.
And finally, while private equity is arguably in a bubble, it has more than US$1tr of dry powder at the moment, as well as well structured long term debt terms. That's one hell of a potential bid.
I've been wrong before, and no one knows for sure what's going to happen, so I could be totally off. But it feels like the lows to me. Probably the biggest downside risk is oil goes to US$20/bbl, which is entirely possible; but OPEC+ could also come back to negotiating table also
