Morning Notes — Uncertainty Risk Premium

Markets hate uncertainty and there’s no lack of it at the moment, especially around US infection rates as testing begins to increase. The worst-case scenarios being discussed on social media and televised broadcasts of 5-50 million expected US hospitalizations and 2 million deaths far surpass every model and every curve in every geography…including the Lombardy region in Italy. And 2 million US deaths would surpass the actuarial equivalent from 1918’s Spanish flu pandemic. China will publish the results of its GILD trial at the end of April and REGN’s cocktail of antibodies can also be used on at risk individuals. But markets could consider any possibility until the infection rate decelerates/curve rolls over. A decelerating infection curve is expected to be the ‘all clear’ for investors, but markets will have already stabilized and improved before that occurs.