GS: markets bottom when you can put limits on the tail risks
To think about the conditions for a market trough, we need an explanation for what drives market recoveries in crises. The core insight is that while conditions are deteriorating rapidly, markets find it hard to be confident in the limits of the damage and so put heavy weight on deep negative tail risks. Inflection points are often, in the first instance, about the market being able to put limits on those tail risks even before true recovery is visible.
what are the tails now:
1. A stabilization or flattening out of the infection rate curve in the US and Europe.
2. Visibility on the depth and duration of disruptions on the economy
3. Sufficiently large global stimulus.
4. A mitigation of funding and liquidity stresses
5. No intensification of other tail risk