From its February 2020 peak to a March 2020 trough, the S&P 500 index fell 34%. This fall was accompanied by extreme volatility, at a level last seen during the global crisis. Invariably the selloff was accompanied by media speculation about the onset of another Great Depression. However, the incidence of COVID-19 cases during most of this selloff was not yet at extreme levels, as shown in Figure 1, and the economic impact of the crisis was not yet evident.1

What drove this precipitous market decline? It was in part a rational anticipation of future COVID-19 cases and the associated impact on the economy and on society more generally. An article in the Wall Street Journal on 12 June 2020, for example, details a 31 January meeting where a medical expert from the Wellcome Trust warned investors that the upcoming health crisis would be surprisingly severe, with very negative impacts on supply chains and the travel industry….

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