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A medical recovery

May 14th, 2020
Italy
‪You might not have noticed, but yesterday was a big day for Italy. 50% of the Corona virus patients have now recovered. This means the number of patients who are sick is falling too. It’s taken 3 months to get to this point & at this rate to get over 90% recovered will take a couple more. A 6 month recovery.

Italy @. 50% & the previous JCI recoveries...

1997
‪Like this one, my first crisis in 1997 caught people by surprise. It was a dramatic fall, the combination of the rupiah & stockmarket took the JCI index down 91% in US$. Things happened fast, it took 5 months to reach the low point. Then stocks bounced, but it was 10 years before they returned to the previous $ level.‬

2008
‪2008 was nasty too, but more of an international crisis as leverage in Indonesia was low. The rupiah fell, stocks fell, interest rates went up,. This time the combination meant the JCI fell 60%, ironically just as it had recovered from the 1997 drop. It took less time to reach the low & the recovery to the previous level was 2 years.‬

2020
‪This current crisis has been dramatic too. The rupiah declined, but only 15%, stocks fell, but less, by 40% in $ terms & have already bounced. Interest rates went up, but not so much. 2008 recovery took only 1/5th of 1997. If this time the recovery takes again 1/5th just like last time, then 1/5th of 2 years is exactly....

6 months
‪Crises take time to recover because adjustments have to be made. In 1997 prices deflated & took 10 years to get them back up in real terms, stocks followed. This time what has to recover is patients. We know the majority will & in 3 to 4 weeks. In 6 months most will be better & the market will too.‬

Sebastian

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