Bringing a gun to a gun fight. Mar 20, 2020

Bringing a gun to a gun fight. Mar 20, 2020

•Proposed fiscal measures in the US and Europe are beginning to look adequate for a corona crisis peaking in about a month. Failing that, more will be needed. Speed of implementation is critical. The devil is in the detail with respect to corporate bail-outs.

• Macro data will gradually gain more prominence, but the freezing up of credit markets remains the main short-term risk. Both the Fed and the ECB look well prepared, but credit events could still trigger panic reactions.

• The fall in oil prices adds to credit risks which could spread to the housing market.

• Long-dated US-Treasuries and Bunds have failed to the provide the usual crisis hedging. The USD looks like the last major hedge asset available.

•In equity space, high tech looks well positioned to withstand a more protracted crisis. Small caps look particularly exposed to that scenario.

• Give the time delay, the spread of the coronavirus in the US is now key.