[CyanLite4]

I’m betting on a V-shaped recovery. Reasons:

1. There’s so much friggin stimulus coming that something big will happen. The (U.S.) Fed is buying trillions of anything resembling bonds at the moment. Treasuries, commercial paper, muni’s. And doing a trillion PER DAY in the repo market. Plus $2+ trillion coming from Congress, which includes checks directly to consumers and also up to $4 trillion more in direct lending to small businesses with forgivable loans. Not to mention interest rates at 0% and gas prices at $1.50/gal. The financial sector is healthy. Big tech companies are still sitting on a few trillion in cash.

2. Everyone has cabin fever and missed their spring breaks and perhaps summer vacations. Prices on travel and leisure are at an all time low. A weeklong trip to Hawaii for a family of 5 is down to like $1500.

3. At some point (I believe in days/weeks) there will be a medical breakthrough. Hydroxychloroquine+Azithro has had stunning results in South Korea, China, and France. Many US docs are already prescribing now. Even if this works only 40% of the time, that’s significant enough to flatten the curve and most importantly lower the death rate around the seasonal flu. Early anecdotal evidence suggests it’s been effective in 90%+ of cases.

4. I think by mid-April folks especially in the U.S. are gonna say enough is enough and break containment. The rest of the 80% of America isn’t willing to shutdown the entire economy for the 1% who face almost certain death from this disease. I know that’s crude and sounds cold-hearted, but Fox News is going to be very convincing that we should just resume our normal way of life and let the chips fall where they may. Election season starts in earnest in mid-Spring and Trump I believe will end the shutdowns and tell us to go back to living our lives. Biden will almost certainly do the same with a focus on rebuilding America. People can shut down for a week or two, anything longer than that and you face rebellion. School has been out since early March and the soccer moms here just want to go back to being normal. Expect a presidential candidate to jump out first with a “let’s get America back to work” strategy and end the shutdowns and maybe only recommend quarantines for the at-risk population.