Post Covid, the risks are skewed to the downside: Stephen Miller

May 7, 2020

GSFM’s investment consultant, Stephen Miller, writes for Firstlinks:

When it comes to the Covid-19 crisis, if we have learnt anything amid the plethora of commentary from an army of ‘experts’ across a plurality of disciplines, it is just how much we don’t know.

To paraphrase former US defence secretary, Donald Rumsfeld, not only are there a lot of ‘known unknowns’ but by definition incalculable ‘unknown unknowns’.

The reality of making Covid-19 forecasts

Economic and financial developments, and more importantly economic and financial forecasts, should be understood in that context. Put simply, the current circumstance is one for which there is little precedent and forecasting, which is fraught at the best of times, and especially so now.

On the economic consequences, it is safe to say that the ‘base case’ is probably the worst we have confronted since the Great Depression. But the distribution of possible outcomes is immensely large, and, in my view, skewed to the downside.

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