With no other analog in modern economic times, outside of World Wars, the global economy has come to essentially a standstill. Central Banks and Governments have done what institutions do in crisis mode, which is throw money at the perceived problem. I say perceived problem because unlike the GFC this is a system-wide problem which is going to exact consequences on every single facet of the economy. There is no ring-fencing the economic fallout from this crisis and looking at the stock markets as a barometer of what the tail end of this will look like is foolhardy at best. The one similarity that I would concede to the GFC is that much like 2008/2009 we are now seeing the hidden risks that were not so hidden. In our Jan 17th post we wrote about a possible feedback loop occurring when illiquidity from one part of the capital markets triggered responses from other disparate sectors, well little did we know that not 60 days later this would happen writ large. However, Fed actions to address this illiquidity have far surpassed anything we saw with the GFC, with asset and Treasury purchases totaling around 85Bln per month in 2008, the current program is seeing 125Bln in miscellaneous Fed purchases per day. This is the ultimate in QE infinity. In addition to The Fed action, Central Banks in conjunction with Governments across the globe , are committing significant funds to combat this crisis, even Germany has allocated 750bln Euros to stem the financial losses associated with the pandemic: note they committed next to nothing during the 2008/09 GFC. In short, real funds are being directed in real time to combat what should be considered a multi-headed structural crisis: medical, financial, and Governmental. My point in all of this is that unlike 2008/09, this crisis is truly more systemic, more far reaching, and more sustainably damaging to global growth. Any thoughts of a V recovery should be tossed aside in spite of recent pronouncements of a return to “normalcy”. Our new normal will look nothing like our most recent past, particularly given the tenuous nature of the global economy heading into this crisis. When thinking about what the next 6-12 months will look like, Forget the V, Expect a W, and Fear the L.