Corona Virus: April 10

I will try to capture my thoughts on a regular basis.  I'm curious to see how my perspective changes as the pandemic evolves.  I regularly follow the economic and financial market news so I want to see how my understanding of that evolves as well.

Seems to me the best way to start is to think about the various models.  In economics as well as in markets experts are called upon to make predictions about economic factors like GDP, unemployment, inflation, etc.  In financial markets the predictions are about the equity markets, interest rates, corporate profits, stock multiples, etc.

The pandemic models try to predict both number of folks infected and number of deaths.

What all these models have in common is that they are usually represented as a cartesian graph where the X-axis is time.

The dependency seems to be; the health care/pandemic model which will determine the economic model which in turn will determine the financial market model.   The unknown is all of these cases is the X-axis.  My current understanding is that the longer the pandemic model stretches out the greater the impact to the economy and hence the market.  The best case scenario is that the stay-at-home orders begin to ease in early May.  This is based on the expectation that the pandemic will peak in the US within a week - say by April 15th.

What remains undetermined is that are the other conditions that need to be satisfied before work can resume.   I am making the assumption that no treatment is found in April.

Here's the current status:
- number of new cases is 30,000/day
- number of deaths is over 1,000/day

I would think that we would need to see the numbers reduced to something like <1000 new cases and < 100 deaths with many states at zero for both.

The second condition would be the availability of mass testing capability.

A few words about the economy.  Over the last 3 weeks 15,000,000 people have filed for unemployment.  Current estimates are that we will get to 15% unemployment rate by end of April.  The other current assumption is that a return to work will be gradual.  Some industries especially travel and leisure may remain at low level of employment for months.  No one knows how consumer behavior will change once the stay-at-home order is rescinded.  Putting people back to work impacts the supply side but the consumer demand side is unknown and unpredictable.

All this leads to is market uncertainty.  I am looking at opportunities to increase my equity holdings and scale back my bond holdings but right now there are too many unknowns.  The biggest unknown is the X-axis.