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Shaped Recoveries

A lot of economic commenters have used letters as a shorthand to describe potential economic scenarios of what might happen after the covid-19 outbreak is controlled. They are great as visual aids, but what exactly is the difference between them? What do they mean in practice? After all, we want to adapt our trading and money management strategies, so we need a little more concrete information.

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There isn’t a consensus definition. So, the description of each scenario ought to be considered more as guidelines rather than fixed timetables. However, they can be helpful to clarify just what we are talking about.

The scenarios, starting with the most optimistic:

A V-Shaped Recovery:

This type is was what most people were hoping for initially when the outbreak only affected China. The measures to control the virus would have a rather harsh impact on China, with some minor issues around the world. In its original form, it foresaw th...

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