Brace for the second waves

As we progressed through the pandemic induced recession, there have been much discussion about a second wave. Second waves appear in many forms, and they can threaten the current consensus expectation of a V-shaped rebound.

Here are some of the second wave risks the market faces.

• A second wave of COVID-19 infections
• A second wave of layoffs and wage cuts
• A second wave of bankruptcies

Finally, investors have to face the risk of permanent economic scarring that impair long-term growth potential. Under that scenario, slower growth rates will persist even after any recovery, and affect asset prices in ways that the market hasn't fully discounted.

The full post can be found here.