How will the global economy react to a lockdown?

The coronavirusepidemic has plunged the world economy and financial markets into unchartered territory. The first consequence of this lack of visibility is that, at this stage, we do not know how the situation will evolve. The second is that, in the face of so many unknowns, the best way to deal with the situation is to de-risk our portfolios. These two elements, uncertainty and deleveraging, explain why last week was one of the worst that financial markets have ever experienced, as illustrated by the level reached by the VIX (75), not seen since October 2008. In our view, this crisis poses th…

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