Premium Post: The COVID-19 Playbook

Can an economy pick up from where it left off? On February 20, 2020 the market suddenly woke up to the possibility of COVID-19 causing significant disruption to the U.S. economy and over the next seven trading sessions the S&P 500 dropped more than 12% even as trading volume in the SPY shot up significantly as you can see from the chart below. The COVID-19 Crash The first phase of the decline occurred just before the CDC confirmed the first case of community spread in the U.S. and the sell off accelerated after a brief respite. We wrote about this in our previous premium post titled The COVID-19 Watch List where we said, Community spread was a wake up call to local and federal agencies as well as the U.S. stock market. A 50 basis point rate cut from the fed also did not appear to ease fears as the market battled with both the risk of a highly infectious disease and a Bernie Sanders presidency. With Joe Biden taking the lead on Super Tuesday with an estimated 566 delegates (1,991 needed to win the nomination), the market rebounded strongly as at least one of the...

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