But it's not crazy to expect the markets to rebound. People are becoming unemployed for a _transient_ reason of lockdown etc., economic recession is due to the pause button being pressed, and not a fundamental breakdown in economic activity.
Of course prolonged lockdown etc. could make things worse still. But the main pain we see is definitely expected to me short-medium term.
As for markets being irrational - actually, I think they are more often rational than not. They are mostly bashed for being irrational in hindsight, which, well, is not really fair. Also, it is just often rational, but with respect to different criteria than what is widely assumed.
The market seems to be pricing in the best case scenario here. They're saying that almost everything is back to normal by Q3.
This would be 4 really bad months (March-June) total. The reality is that the future is very uncertain at this point. The market drastically underestimated the virus in early February, and it appears the same phenomenon is happening now.
Covid 19 will eventually (a year or 2) go through the whole population and kill a lot of people, especially pensioners. Then it will be a background level killer like flu and cars. This is bad for many humans and people who love them but it's not bad for the economy.
But it's not crazy to expect the markets to rebound. People are becoming unemployed for a _transient_ reason of lockdown etc., economic recession is due to the pause button being pressed, and not a fundamental breakdown in economic activity.
Of course prolonged lockdown etc. could make things worse still. But the main pain we see is definitely expected to me short-medium term.
As for markets being irrational - actually, I think they are more often rational than not. They are mostly bashed for being irrational in hindsight, which, well, is not really fair. Also, it is just often rational, but with respect to different criteria than what is widely assumed.