The policy response to the current crisis is unprecedented in its speed and magnitude. As a result, we have asset reflation in warp speed.

You can read the key takeaways from the recent Bridgewater note in the below thread.. https://www.bridgewater.com/research-and-insights/reflation-in-warp-speed

1) What took three years and seven months in the Great Depression took one year and six months in 2008, and only one month in the current crisis!

2) In the Great Depression, it took 3 years 7 months from Black Thursday before President Roosevelt broke the peg to gold, allowing the Fed to print enough to stop the free fall in equities and the economy, and the reflation continued for 4 more years before the next downturn.

3) In the Global Financial Crisis, the turn came with the start of QE in March 2009—a year and a half after stocks began to fall—and it wasn’t until a pause in QE2 that equities had another sell-off of more than -20%.

4) This time, when the pandemic hit, the stimulus from the Fed and fiscal authorities was so swift and so massive that the equity downmarket lasted only a month, and stocks are now approaching their pre-crisis peaks once again.

5) The biggest cause-effect drivers are the degree and speed of the policy response and its effectiveness.

The lesson from the last recovery is that the risk of doing too little is much greater than the risk of doing too much.

6) As soon as policy makers step in to print and spend, there is an immediate reflation across asset markets. The stimulus puts a floor on equity declines, kicking off a new rally.

7) We expect that policy makers will keep pushing to do whatever it takes to achieve their goals, but perhaps with some gyrations (especially in fiscal policy) along the way.

8) We’re less concerned that policy makers won’t do enough and more concerned about how much room there is to keep stimulating before running into limits—in the form of inflation or a loss of faith in the currency

9) Our guess is that over time, extreme fiscal and monetary coordination will bring markets and economies together: the nominal returns in the economy will rise as inflation is pushed higher and as asset returns are diminished in real terms, but probably positive in nominal terms