Markets surged on Monday following global announcements of policy easing. This is in line with my 13 February expectations that Covid-19 was unlikely to end Tina (There Is No Alternative), a market regime where low yields have allowed equity valuations to decouple from economic performance. Based on policy makers delivering the promised easing, I am expecting the rally to continue.
First, while Covid-19 is highly contagious, it has a low mortality rate. A global pandemic is underway and countries with low infection rates likely have not implemented comprehensive testing. As a result, the consensus mortality rate of about 2% could be an overestimation. South Korea, which has implemented mass testing and has the highest infection rate outside of China, has mortality rates of about 0.5%, though of course this could change (Chart 1).
TO READ THIS HIVE EXCLUSIVE
SUBSCRIBE TO MACRO HIVE PRIME