Hiding in plain sight

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Global markets were down at the end of October, the worst month since the low point in March, because of renewed fears of a second wave and its economic impact on jobs and growth, aside from the unquantifiable human cost.

Why were the markets surprised? The World Health Organization (WHO) had already warned, once it declared Covid-19 a global pandemic on 11 March, that it would probably last about 18 months. This forecast was extrapolated from the experience of the Spanish flu, which lasted two years ( 1918-20 ), but also took into consideration the advance of technology and human development in the ensuing century.

Similarly, the Federal Reserve warned in early summer that the path of the economy would follow the path of the pandemic,  which was uncertain and unpredictable. So, no surprise there either. Yet the markets were spooked and startled. Go figure, as they say Stateside.

At the top of every cycle, investors talk of a new ‘paradigm shift’, which tries to ...