Over the past month, equity markets and financial assets broadly, have been attempting to price in the dual shock of a pandemic and the sudden collapse in oil prices, the latter a huge negative for the energy sector. The roughly 30% drop in the U.S. equities is pricing in >100% probability of a recession.

Stocks have responded to the growing liquidity stresses across financial markets. The 100% basis point Federal Reserve cut Sunday has been ignored by investors, arguably worsened fragile sentiment, and likely contributed to the further selling we saw Monday. At one point, the VIX, or “fear index” posted an all-time closing high, around 83, which is higher even that during the Great Financial Crisis of 2008-09.

History is often a useful tool, and since 1900, there have been 22 equity drawdowns of 20% or more and, painful as it has been, the current 30% slide would rank only number 14 overall. Notably, the typical bear market during a recession period is 30%, so the S&P 500 index has already discounted a recession. But this has been a particularly disorderly liquidation, with investors not attempting to discount the pandemic’s fundamental outcome. Has the stock market become uninvestible?

The relentless selling has made it virtually impossible to distin...

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