From its February 2020 peak to a March 2020 trough, the S&P 500 index fell 34 percent. This fall was accompanied by extreme volatility, at a level last seen during the global financial crisis. Invariably the selloff was accompanied by media speculation about the onset of another Great Depression. However, the incidence of COVID-19 cases during most of this selloff was not yet at extreme levels, as evidenced by Exhibit 1 below.
Exhibit 1: S&P 500 index and incidence of global COVID-19 case counts, as reported by the Johns Hopkins COVID-19 dashboard. Source: Bloomberg.
So what drove the precipitous market … Read more