WEBVTT - Stocks Plunge Amid Oil Shock 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel Podcast. I'm Paul swing you. 0:00:05.360 --> 0:00:07.680 Along with my co host Lisa Brahma Waits. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.960 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:21.720 at Bloomberg dot com. Oil prices in a free fall 0:00:21.800 --> 0:00:27.040 today after over the weekend, negotiations between Russia and Saudi 0:00:27.080 --> 0:00:29.360 Arabia as well as the rest of the OPEC allies 0:00:29.840 --> 0:00:33.839 broke down completely, and to quote Julian Lee, who is 0:00:33.920 --> 0:00:37.120 a Bloomberg opinion columnist and Bloomberg oil strategist, in a 0:00:37.200 --> 0:00:41.200 column over the weekend, he wrote, this is developing into 0:00:41.240 --> 0:00:45.240 a game wool blink first between two contestants who have 0:00:45.360 --> 0:00:48.319 cut off their eyelids. The key question what can make 0:00:48.360 --> 0:00:52.159 them come together and actually end this price war that 0:00:52.280 --> 0:00:56.080 is ravaging oil prices. Ellen Wald is deeply familiar with 0:00:56.840 --> 0:01:00.440 Mohammed bin Selman of Saudi Arabia as well as entire 0:01:00.520 --> 0:01:03.600 oil complex, and she joins us Now ellen Wald, president 0:01:03.600 --> 0:01:06.720 of Transversal Consulting, a Bloomberg Opinion contributor and friend of 0:01:06.760 --> 0:01:10.119 the show, Ellen, so glad to have you here. Can 0:01:10.160 --> 0:01:12.240 you give us a sense of what it will take 0:01:12.280 --> 0:01:15.280 to bring Saudi Arabia and Russia back to the table 0:01:15.319 --> 0:01:17.680 to come to some kind of agreement and stave off 0:01:17.760 --> 0:01:21.080 some of these declines. I'm not sure that there is 0:01:21.120 --> 0:01:23.640 a real possibility at this point to bring them back 0:01:23.640 --> 0:01:26.839 to the table, because what you're looking at our two 0:01:27.000 --> 0:01:31.160 powers to oil powers that have fundamentally different strategies and 0:01:31.240 --> 0:01:36.600 different goals. Here, Russia's goal is Russia. Frankly, Russia is 0:01:36.640 --> 0:01:39.000 looking out for number one. It's looking out for Russia. 0:01:39.319 --> 0:01:42.319 And then you have Saudi Arabia, which, in addition to 0:01:42.560 --> 0:01:45.920 having its own interests at heart, also cares about OPEQ 0:01:46.200 --> 0:01:49.640 and it cares about its political power within OPEC. That's 0:01:49.640 --> 0:01:52.560 not something that Russia really cares for. And so Saudi 0:01:52.560 --> 0:01:56.320 Arabia is saying, look, we said basically at this OPEC meeting, 0:01:57.000 --> 0:02:00.000 we see a crisis in demand, we need to cut 0:02:00.040 --> 0:02:02.880 oil production. We're going to do our part, but we 0:02:02.960 --> 0:02:05.280 need you to also do your part. We're not going 0:02:05.360 --> 0:02:08.600 it alone anymore. Because back in December, we essentially saw 0:02:08.720 --> 0:02:11.799 Saudi Arabia saying, let's all cut, but we're going to 0:02:11.919 --> 0:02:15.280 cut so much more as an incentive. And Russia is 0:02:15.280 --> 0:02:18.680 looking at this saying, why should we cut when we 0:02:18.720 --> 0:02:22.240 can get the saudiast to do it, And the Saudias said, no, 0:02:22.720 --> 0:02:24.320 we're not going to do that this time. And now 0:02:24.400 --> 0:02:27.799 you've got a price war and a production war with 0:02:28.000 --> 0:02:30.960 a variance or now come for Saudi Arabia said, Abybia 0:02:30.960 --> 0:02:34.120 can win the production war, they've got more spare capacity. 0:02:34.360 --> 0:02:37.000 But is there really a winner in a production war 0:02:37.360 --> 0:02:40.600 where you can't find buyers for that oil? And that's 0:02:40.760 --> 0:02:42.600 really the question. Yeah, And that's kind of where I 0:02:42.600 --> 0:02:44.960 wanted to go. I mean, I get Russia may have 0:02:45.000 --> 0:02:48.639 different agenda, may have a different agenda than Opeque in 0:02:48.680 --> 0:02:52.920 Saudi Arabia, but they don't benefit from this plunging oil price. 0:02:53.000 --> 0:02:55.560 So what's kind of there? How much pain can they 0:02:55.560 --> 0:02:58.600 really take? Do you think? Well? Right now they've said 0:02:58.600 --> 0:03:01.680 that they can take Hayne for six to ten years, 0:03:01.680 --> 0:03:07.040 that they're willing to accept prices between you and thirty 0:03:07.080 --> 0:03:09.240 dollars a barrel, which, by the way, they're not really 0:03:09.280 --> 0:03:13.160 making money at that price point, whereas Saudi Arabia can 0:03:13.280 --> 0:03:15.720 make money, But they're saying, look, we've got a hundred 0:03:15.720 --> 0:03:19.239 and fifty billion dollar UH Sovereign Wealth Fund, and we're 0:03:19.240 --> 0:03:21.959 willing to sell those assets to fund our budget for 0:03:22.320 --> 0:03:25.840 six to ten years. So whereas on Saudi Arabia side, 0:03:26.000 --> 0:03:28.560 they can pump oil for two dollars and eighty cents, 0:03:28.600 --> 0:03:30.800 so if they're selling it at twenty five dollars a barrel, 0:03:31.000 --> 0:03:34.000 they're still making a profit, whereas Russian companies might not 0:03:34.200 --> 0:03:37.640 necessarily be making a profit. But is Saudi Arabia really 0:03:37.640 --> 0:03:41.960 willing to deploy other funds to stave off budgetary issues? 0:03:42.120 --> 0:03:44.920 And that's a totally different question, and it's not clear 0:03:44.960 --> 0:03:48.120 that Saudi Arabia is prepared with its sovereign Wealth fund 0:03:48.160 --> 0:03:50.240 to do the same kind of thing that Russia is. 0:03:50.520 --> 0:03:52.800 Ellen it doesn't sound like there's an easy resolution to this, 0:03:52.880 --> 0:03:56.760 then yeah, I don't. I don't see an easy resolution. 0:03:56.920 --> 0:04:00.320 I think that that if they got to other and 0:04:00.320 --> 0:04:03.840 they started talking, that tensions would definitely calm down. And 0:04:03.880 --> 0:04:08.000 I do think that there is um continued communication between 0:04:08.040 --> 0:04:11.360 the two. You've got a Russian oil ministry, Russian energy 0:04:11.360 --> 0:04:14.640 ministry that wants to still sell Saudi Arabia nuclear technology 0:04:14.720 --> 0:04:18.680 and liquefied natural gas. So it's not like all communication 0:04:18.920 --> 0:04:21.799 is suddenly cut. This isn't, you know, the Cold War 0:04:22.400 --> 0:04:25.719 between Saudi Arabia and Russia. But um, it's not going 0:04:25.800 --> 0:04:28.960 to be resolved tomorrow, well but for sure. But so 0:04:29.040 --> 0:04:31.680 let's let's just sort of extrapolate out if this is 0:04:31.720 --> 0:04:37.560 a prolonged issue tension locking of heads here over what 0:04:37.839 --> 0:04:41.200 production ought to be, what is going to be the 0:04:41.320 --> 0:04:45.200 consequence for the entire oil complex, in particular the shale 0:04:45.240 --> 0:04:47.640 patch which we're seeing right now getting crushed in the 0:04:47.680 --> 0:04:51.080 high old bond market. To also the oil majors, which 0:04:51.080 --> 0:04:56.080 shares have actually been just absolutely devastated today. Yeah, they're 0:04:56.120 --> 0:04:58.120 they're going to have a tough time. I don't think 0:04:58.160 --> 0:05:01.400 that it's a death knell for the shale oil patch 0:05:01.480 --> 0:05:04.240 because the assets are still there and they're still going 0:05:04.279 --> 0:05:06.360 to be valuable, and so you are, you're going to 0:05:06.480 --> 0:05:09.560 have people getting crushed. But you will see war consolidation, 0:05:09.880 --> 0:05:13.280 You'll see you know, the players that can the oil 0:05:13.320 --> 0:05:17.880 majors taking on, you know, buying up well producing good 0:05:17.920 --> 0:05:21.560 producing assets. Um, it won't be fun there and the 0:05:21.640 --> 0:05:25.719 area is definitely going to experience an economic contraction. But 0:05:26.400 --> 0:05:30.320 you can't kill the assets. They're still there. However, places 0:05:30.320 --> 0:05:34.000 like Venezuela and Iran that are really on the brink 0:05:34.080 --> 0:05:35.719 are going to have a very hard time of it, 0:05:35.760 --> 0:05:38.400 particularly because Russia has played such a big role in 0:05:38.480 --> 0:05:42.280 kind of keeping Venezuela limping along. Ellen, Well, thank you 0:05:42.320 --> 0:05:44.360 so much for joining us. Ellen wall is a president 0:05:44.400 --> 0:05:47.839 of Transversal Consulting. She's also Bloomberg Opinion contributor, and we 0:05:47.839 --> 0:05:51.039 always appreciate her commentary and thoughts on the global energy 0:05:51.040 --> 0:06:04.200 markets with her great experience. Well, with markets in free 0:06:04.200 --> 0:06:07.040 fall this morning, some might be tempted in the equity 0:06:07.120 --> 0:06:10.159 markets maybe dip their toe, try to find some value. 0:06:10.480 --> 0:06:12.360 Some are going to say, I'm not getting anywhere near 0:06:12.480 --> 0:06:15.880 this freight train right here. Let's get an informed opinion 0:06:15.960 --> 0:06:18.599 from Gina Martin Adam. She's a senior equity strategist for 0:06:18.640 --> 0:06:21.560 Bloomberg Intelligence. She joins us here on our Bloomberg Interactive 0:06:21.600 --> 0:06:25.200 Broker Studio. So, Gina, what do you make of not 0:06:25.320 --> 0:06:27.680 just today, but maybe the last ten or you know, 0:06:27.800 --> 0:06:30.480 days or two weeks? Uh, this market activity we've seen 0:06:30.520 --> 0:06:34.160 in equities? Yeah, you know, I think the market started 0:06:34.200 --> 0:06:36.640 off at an overbought condition. You have to consider that 0:06:36.720 --> 0:06:40.560 as the starting point, we were overbought, we were likely overconfident. 0:06:40.680 --> 0:06:44.000 Valuations were well above our modeled estimates for where fair 0:06:44.080 --> 0:06:47.359 value was then. So we started to see that deflation 0:06:47.440 --> 0:06:49.960 with the coronavirus concerns and as those spread around the world. 0:06:50.000 --> 0:06:52.720 Obviously that created a tremendous amount of technical weakness in 0:06:52.760 --> 0:06:56.720 the markets, but did start to create some fundamental value 0:06:56.880 --> 0:07:00.000 at the very least. Now you've got the destabilizing effect 0:07:00.080 --> 0:07:02.599 to oil prices adding onto the pressure, so it's almost 0:07:02.640 --> 0:07:05.560 like this pile on effect that the equity market is experiencing. 0:07:06.200 --> 0:07:08.359 You know, My sense is you don't normally get a 0:07:08.400 --> 0:07:10.800 five to seven percent decline in a single day on stocks, 0:07:10.800 --> 0:07:14.240 and usually those are representative of pretty significant panic lows. 0:07:14.920 --> 0:07:18.000 But you can't eliminate the possibility that there's further downside 0:07:18.000 --> 0:07:20.160 from here, because you're trying to predict human behavior and 0:07:20.280 --> 0:07:23.520 risk tolerance, and that's just impossible to do. I think 0:07:23.560 --> 0:07:25.320 a lot of this for investors is going to depend 0:07:25.400 --> 0:07:27.840 upon your time horizon. If you're thinking, you know, I 0:07:27.880 --> 0:07:29.360 gotta be up, and I've got to be up in 0:07:29.360 --> 0:07:32.560 the next two weeks, your time horizon is probably too short. 0:07:32.640 --> 0:07:34.800 To have a whole lot of confidence. If your time 0:07:34.840 --> 0:07:37.400 horizon is the next fifteen years, I want to look 0:07:37.440 --> 0:07:40.240 for some value for a fifteen year time horizon. Then 0:07:40.280 --> 0:07:42.760 you've got to start thinking about sharpening your pencils and 0:07:42.800 --> 0:07:45.640 finding some ideas in the equity market because true value 0:07:45.680 --> 0:07:48.600 has been unlocked here. Um when we look at things 0:07:48.640 --> 0:07:52.520 like the oil price impact, for instance, on fundamentals, the 0:07:52.640 --> 0:07:54.600 energy sector is three percent of the market cap of 0:07:54.640 --> 0:07:58.400 the SMP five hundred. Now, so a falling oil price 0:07:59.080 --> 0:08:03.240 is not particularly detrimental detrimental to the earnings outlook, unless 0:08:03.520 --> 0:08:07.440 it's accompanied by, you know, a snowball effect of serious 0:08:07.520 --> 0:08:12.080 economic recession emerging, big declines in new orders, growth, employment 0:08:12.080 --> 0:08:14.880 conditions deteriorating significantly. Those are the things that you want 0:08:14.920 --> 0:08:17.080 to look at. And if that's the case, then you 0:08:17.080 --> 0:08:19.040 want to start to price recession. I do say, to 0:08:19.120 --> 0:08:21.800 price recession, We've probably got quite a bit of downside 0:08:21.880 --> 0:08:25.200 risk still to come, you know, will we have recession 0:08:25.280 --> 0:08:27.680 or not? As still a toss up? Well, that's that's 0:08:27.680 --> 0:08:30.560 exactly where I wanted to go. What would it look 0:08:30.640 --> 0:08:33.640 like for us to price in recession? How much worse 0:08:33.720 --> 0:08:36.840 would it get? Yeah, So our view is to price recession, 0:08:36.880 --> 0:08:39.760 we probably have to go to around sixty five. That's 0:08:39.800 --> 0:08:43.000 taking an assumption of where the fair value multiple is 0:08:43.040 --> 0:08:45.240 considering where interest rates are, and we all know that 0:08:45.280 --> 0:08:50.200 interest rates are extremely accommodative for equity and valuations right now, 0:08:50.640 --> 0:08:53.760 but also your average recessionary decline in EPs, which is 0:08:53.760 --> 0:08:58.400 about on earnings. To get to combine those two models, 0:08:58.400 --> 0:09:00.080 and you get a downside risk for the s P 0:09:00.200 --> 0:09:04.080 five all the way down to which is a bit 0:09:04.080 --> 0:09:06.720 more than your average recessionary decline. It's a more than 0:09:07.360 --> 0:09:09.920 decline in stocks from peach trough. We're tritting with Gina 0:09:09.960 --> 0:09:12.280 Martin Adams and Bloomberg Intelligence. We have the SMP down 0:09:12.320 --> 0:09:15.880 one seventy, that's five point seven percent, the Dow off 0:09:15.920 --> 0:09:19.680 about fifteen hundred points here. So Gina, let's talk technical levels. 0:09:19.760 --> 0:09:21.360 As I know you like to look at charts as 0:09:21.400 --> 0:09:23.760 well as the fundamentals here. Where are we kind of 0:09:23.800 --> 0:09:26.640 broad market in terms of support levels and that that 0:09:26.720 --> 0:09:29.920 kind of thing. Well, we busted through the retracement level, 0:09:30.760 --> 0:09:33.200 which you know we had been watching that pretty carefully. 0:09:33.240 --> 0:09:37.319 That's right around sixty on the SMP five hundred. That's 0:09:37.360 --> 0:09:40.679 where we found stabilization to Fridays ago on that major 0:09:40.720 --> 0:09:46.360 capitulation low. Um. We certainly didn't even test it last Friday, 0:09:46.400 --> 0:09:49.000 even though our closing low on Friday was pretty weak. 0:09:49.559 --> 0:09:52.439 So at this point, I think hundred is serving as 0:09:52.480 --> 0:09:55.040 some sort of round number resistance. It happens to mark 0:09:55.120 --> 0:09:57.360 a low from several low points over the course of 0:09:57.360 --> 0:09:59.600 the last year as well. Then you've got to get 0:09:59.600 --> 0:10:02.680 all the way back into the correction, and which really 0:10:02.880 --> 0:10:06.480 is dicey technicals, right, I mean, there's just very few 0:10:06.640 --> 0:10:11.079 consistent levels to lean on back in that correction I'm 0:10:11.080 --> 0:10:13.599 looking at right now as the level to watch on 0:10:13.640 --> 0:10:17.160 the index. How concerned are you about a panic among 0:10:17.280 --> 0:10:19.800 retail investors as they start to see some of the 0:10:19.840 --> 0:10:22.880 headlines and here some of the rhetoric out of Wall 0:10:22.920 --> 0:10:25.520 Street today. Yeah, you know, it's really interesting. Our et 0:10:25.640 --> 0:10:27.760 F team has actually done a lot of analysis on this, 0:10:27.920 --> 0:10:32.760 and the retail investor is the sort of one solid 0:10:32.880 --> 0:10:35.720 leg that's been in the equity market even in August. 0:10:35.760 --> 0:10:38.439 Remember all the panic activity in the equity market that 0:10:38.480 --> 0:10:40.199 we experienced in August. We had a couple of three 0:10:40.240 --> 0:10:42.360 percent down days in the midst of only a five 0:10:42.400 --> 0:10:46.480 percent correction. It was very odd very similarly this time around. 0:10:46.800 --> 0:10:50.920 The retail investor does not appear to be managed manipulating 0:10:50.920 --> 0:10:54.360 their portfolio. They're not really giving up the ghost on equity, 0:10:54.480 --> 0:10:56.960 so they are inherently a source of support, while the 0:10:56.960 --> 0:11:01.680 institutional investor has been significantly more volatile and more weak 0:11:01.720 --> 0:11:05.080 over the last couple of corrections. So I am somewhat 0:11:05.120 --> 0:11:08.400 concerned if we do get that kind of last bastition 0:11:08.440 --> 0:11:11.440 of stability capitulating on the on the equity rally, it 0:11:11.480 --> 0:11:14.240 could create a pretty big down draft. But so far 0:11:14.600 --> 0:11:18.120 that investor seems to be sticking it out. Gina Martin Adams, 0:11:18.120 --> 0:11:20.720 thank you so much for being with us, always illuminating. 0:11:20.760 --> 0:11:24.120 Gina Martin Adams, chief equity strategist for us here at 0:11:24.160 --> 0:11:28.319 Bloomberg Intelligence, insightful to hear about the fact that we're 0:11:28.320 --> 0:11:31.400 not even pricing in recession yet we have another five 0:11:31.400 --> 0:11:34.480 percent more to go lower in the S and P 0:11:34.679 --> 0:11:36.800 before we get to the levels that would price that in. 0:11:36.840 --> 0:11:40.600 According to Gina Martin Adams, who has been absolutely stending 0:11:40.640 --> 0:11:54.679 on this consistently throughout Boy On days like today, when 0:11:54.679 --> 0:11:58.440 you've got risk assets across the board trading off substantially, 0:11:58.520 --> 0:12:01.160 some say in a panic mode. It is always good 0:12:01.160 --> 0:12:03.400 to have our good friend Christina Hooper join us give 0:12:03.480 --> 0:12:08.400 us some perspective here. Christina Hooper's investcos chief Global Market Strategists. 0:12:08.440 --> 0:12:10.640 She joins us here in our Bloomberg Interactive Broker studio. 0:12:10.760 --> 0:12:13.120 So Christina, thanks so much for joining. I know it's 0:12:13.120 --> 0:12:16.360 a busy day for you and dealing with clients. Just 0:12:16.400 --> 0:12:19.040 help us put into perspective what we've seen, not just 0:12:19.080 --> 0:12:21.200 in the last week or so, but particularly this morning, 0:12:21.520 --> 0:12:24.480 with the news over the weekend about oil and the coronavirus. Well, 0:12:24.480 --> 0:12:26.840 I think of it as a one to punch. UM 0:12:26.960 --> 0:12:29.880 markets had come under significant pressure as a result of 0:12:29.920 --> 0:12:33.680 the Corona virus outbreak that spread the concerns about the 0:12:33.679 --> 0:12:36.679 impact on the economy. And then of course we had 0:12:36.720 --> 0:12:41.080 events evolved in oil markets such that we now have 0:12:41.200 --> 0:12:45.320 a supply shock, uh, that disagreement between Russia and the 0:12:45.360 --> 0:12:48.840 rest of OPEC plus which then led to the Saudias 0:12:48.920 --> 0:12:52.400 deciding to add to supply. And so this is a 0:12:52.480 --> 0:12:56.000 scenario where now we're going to see HILD come under 0:12:56.000 --> 0:12:59.480 We're already seeing high you'ld come under very significant pressure. Um, 0:12:59.520 --> 0:13:03.080 the energy sector is coming under very significant pressure. And 0:13:03.200 --> 0:13:08.120 so that is UM really impacting the environment. And I 0:13:08.160 --> 0:13:11.600 think what in general we're seeing is a lack of 0:13:11.679 --> 0:13:17.000 confidence in markets because UM, there is UH, there's not 0:13:17.120 --> 0:13:18.880 a lot of certainty about whether or not we're going 0:13:18.880 --> 0:13:23.319 to get an appropriate response from governments. To me, this 0:13:23.400 --> 0:13:25.520 is what is at the heart of this issue, is 0:13:25.640 --> 0:13:29.400 that what we've seen really since the global financial crisis 0:13:29.480 --> 0:13:34.720 is strong monetary response and a lackluster fiscal response. And 0:13:34.840 --> 0:13:37.720 now it's clear that we need a fiscal response. But 0:13:37.840 --> 0:13:40.520 I think in the memory of the memories of many 0:13:40.559 --> 0:13:45.320 investors is the fact that TARP narrowly passed UM that UM, 0:13:45.400 --> 0:13:47.520 we didn't get much in the way a fiscal stimulus, 0:13:47.559 --> 0:13:51.000 even though that's what we really need to help companies 0:13:51.280 --> 0:13:54.559 get through UM the next few months. If we don't 0:13:54.640 --> 0:13:58.920 get to use your words, an appropriate fiscal response within 0:13:58.960 --> 0:14:03.320 the next few weeks, say even two months, what will 0:14:03.360 --> 0:14:08.040 the fallout be like, Well, it will elongate UH, an 0:14:08.080 --> 0:14:13.119 economic downturn. I mean really, at this we're at essentially 0:14:13.320 --> 0:14:15.680 and decision point where we could go in a variety 0:14:15.720 --> 0:14:21.240 of different directions, depending upon certainly the lifespan of the 0:14:21.320 --> 0:14:24.280 outbreak UM, but more importantly the response to it, the 0:14:24.280 --> 0:14:27.320 health care response, to it um, the fiscal response to it, 0:14:27.360 --> 0:14:31.480 and the monetary policy response to it. And so my expectation, 0:14:31.560 --> 0:14:34.200 my hope is that we get enough of a fiscal response, 0:14:34.440 --> 0:14:38.400 But if we don't, it elongates the downturn um and 0:14:38.480 --> 0:14:42.080 it in many ways it could worsen that downturn over time. 0:14:42.280 --> 0:14:45.160 We can look to China as a model of how 0:14:45.200 --> 0:14:50.400 to do it right. Um. China actually provided significant stimulus, 0:14:50.640 --> 0:14:53.520 not just monetary but fiscal. We were hearing from US 0:14:53.600 --> 0:14:56.880 companies that were saying they were getting subsidized loans from 0:14:56.960 --> 0:15:00.000 China to continue to pay employees even though they weren't 0:15:00.120 --> 0:15:02.960 coming to work. That's the kind of thing we need 0:15:03.040 --> 0:15:06.520 in this environment to really get through because we know 0:15:06.600 --> 0:15:09.600 that there are a lot of Americans that are very vulnerable, 0:15:09.600 --> 0:15:13.440 that don't have any significant level of emergency savings. That's 0:15:13.440 --> 0:15:15.680 not really a concern when things are going well, but 0:15:15.800 --> 0:15:18.680 it is a concern when things are starting to go 0:15:18.760 --> 0:15:22.880 poorly and they might actually see hourly wages cut because 0:15:22.920 --> 0:15:25.800 of all the cancelations that we're seeing, all the change 0:15:25.800 --> 0:15:29.560 in plans, all the disruption being caused by the outbreak. Essentially, 0:15:29.600 --> 0:15:31.560 there's a story on the Bloomberg right now that President 0:15:31.560 --> 0:15:34.440 Trump's aids are actually drafting economic steps to fight the 0:15:34.520 --> 0:15:36.960 virus fall out, So maybe we'll even get some news 0:15:37.000 --> 0:15:39.960 on that potentially uh today, So we'll have to see 0:15:39.960 --> 0:15:42.560 how that plays in. So Christine, as you think about this, 0:15:43.520 --> 0:15:45.720 what's the correct analysis to do? Is it to kind 0:15:45.720 --> 0:15:48.880 of look at valuation, try to find names that you know, 0:15:49.040 --> 0:15:51.280 the business models that you feel are strong, and if 0:15:51.320 --> 0:15:53.800 you find that you know good valuation points, to maybe 0:15:53.800 --> 0:15:56.920 put some money to work. Absolutely, I think this is 0:15:57.000 --> 0:16:01.520 time to be really writing a list and referring to 0:16:01.600 --> 0:16:05.680 that list as you watch the carnage in markets, because 0:16:05.680 --> 0:16:07.800 there are a lot of great names that get beaten 0:16:07.840 --> 0:16:10.840 down in the short run because, as we know, UM, 0:16:10.880 --> 0:16:14.840 when there's blood in the water, UM, there's just insanity 0:16:14.920 --> 0:16:18.840 in the minds of investors. And UM stocks might be 0:16:18.880 --> 0:16:20.840 a voting machine in the short run, but over the 0:16:20.880 --> 0:16:23.520 longer run they are a weighing machine. And so they're 0:16:23.640 --> 0:16:27.320 definitely opportunities out there that are being created by a 0:16:27.520 --> 0:16:30.640 miss pricing of asset classes. I think of this as 0:16:30.720 --> 0:16:34.000 the real march madness, all right. One question that I 0:16:34.080 --> 0:16:37.400 have is how easy is it to execute at those prices? 0:16:37.400 --> 0:16:40.920 In other words, how fluid is a financial system. Right now, 0:16:40.920 --> 0:16:47.040 we're hearing anecdotally of some difficulties with respect to executing trades. Well, 0:16:47.080 --> 0:16:49.760 I think that for the most part, what I've heard 0:16:49.840 --> 0:16:52.040 is that trades have gone through smoothly. I think it 0:16:52.120 --> 0:16:56.200 depends on the volume, UM. But investors don't need to 0:16:56.240 --> 0:16:58.960 pile on in all at once. UM. Have a clear 0:16:59.000 --> 0:17:02.480 head about buying as well as selling. But have that 0:17:02.560 --> 0:17:06.400 list UM, refer to it and and see the opportunities 0:17:06.400 --> 0:17:08.880 created by carnage. It's very hard to call a bottom. 0:17:08.920 --> 0:17:12.200 I know Mark Haines UH famously did that a while 0:17:12.280 --> 0:17:15.960 back on on this advanced anniversary twelve years ago. UM, 0:17:16.000 --> 0:17:18.080 but it's very hard to do that. UM. But you 0:17:18.200 --> 0:17:21.240 know when things are getting oversold, and so you can 0:17:21.359 --> 0:17:25.479 speak in UH to create entry points. Right now, a 0:17:25.520 --> 0:17:30.080 lot of the selling action really has stemmed from institutional investors. 0:17:30.119 --> 0:17:34.680 We haven't seen the mass flight when it comes to retailers. 0:17:34.720 --> 0:17:38.400 Just real quickly, How concerned are you about that? I'm 0:17:38.440 --> 0:17:42.240 not too concerned at this point because certainly for those 0:17:42.320 --> 0:17:47.480 investors that do have that are advised UM, they're likely 0:17:47.680 --> 0:17:52.280 to maintain exposure. I think that our industry has done 0:17:52.320 --> 0:17:55.959 a better and better job of really stressing the importance 0:17:55.960 --> 0:17:59.760 of taking a long term view that for so many, 0:18:00.000 --> 0:18:02.440 for example, the fourth quarter of two thousand and eighteen 0:18:03.040 --> 0:18:05.680 was a blip. Now was very disappointed to get those statements, 0:18:05.720 --> 0:18:08.359 but at the end of the day it was quickly erased. 0:18:08.520 --> 0:18:11.080 Christina Hooper, wonderful having you here with us. Thank you 0:18:11.160 --> 0:18:14.399 so much, and fest of luck through this period of 0:18:14.440 --> 0:18:18.199 Christina Hooper is Investco, Chief Global Market Strategist, joining us 0:18:18.200 --> 0:18:21.879 here in our interactive broker's studios. Thanks for listening to 0:18:21.920 --> 0:18:24.320 the Bloomberg P and L podcast. You can subscribe and 0:18:24.359 --> 0:18:27.520 listen to interviews at Apple Podcasts or whatever podcast platform 0:18:27.560 --> 0:18:30.640 you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney. 0:18:30.680 --> 0:18:33.200 I'm Lisa Abram Woods. I'm on Twitter at Lisa Abram 0:18:33.200 --> 0:18:36.480 woyds one. Before the podcast, you can always catch us worldwide. 0:18:36.480 --> 0:18:37.480 I'm Bloomberg Radio.