WEBVTT - U.S. Recovery Not Likely Until End of Q3: Bart Van Ark 0:00:02.640 --> 0:00:05.360 Welcome to the Bloomberg Penl podcast. I'm Paul swing you. 0:00:05.360 --> 0:00:07.760 Along with my co host Lisa Brahmowitz. Each day we 0:00:07.880 --> 0:00:10.440 bring you the most noteworthy and useful interviews for you 0:00:10.560 --> 0:00:12.640 and your money, whether at the grocery store or the 0:00:12.680 --> 0:00:16.000 trading floor. Find a Bloomberg Penl podcast on Apple podcast 0:00:16.160 --> 0:00:18.079 or wherever you listen to podcasts, as well as at 0:00:18.079 --> 0:00:21.959 Bloomberg dot com. Well, some of the economic data coming 0:00:22.000 --> 0:00:25.920 in is starting to reflect the impacts from the COVID nineteen. 0:00:26.520 --> 0:00:30.040 The Conference Board Consumer Confidence Index decline sharply in March, 0:00:30.080 --> 0:00:33.080 following an increase in February. Help us walk through the numbers. 0:00:33.080 --> 0:00:35.599 Who welcome Bart van Arc. He's a chief econmist at 0:00:35.640 --> 0:00:38.319 the Conference Board. Bart, thanks so much for joining us. 0:00:38.520 --> 0:00:43.279 What are the March data show? Well at them at 0:00:43.400 --> 0:00:45.840 at a good level of the overall consumer Confidence Index. 0:00:45.880 --> 0:00:48.360 Of course, the index is showing a drop from und 0:00:48.479 --> 0:00:51.600 thirty two point six in February two twenty in March. 0:00:51.800 --> 0:00:54.000 That perhaps it is not as you to drop as 0:00:54.000 --> 0:00:56.600 you might expect, but it is important that when we 0:00:56.640 --> 0:00:59.440 look at the responses to this survey, most of these 0:00:59.440 --> 0:01:01.720 responses were still coming in in the sort of early 0:01:01.760 --> 0:01:04.559 half of March, and a majority even in the first 0:01:04.560 --> 0:01:08.160 week of March. So this was before the COVID crisis 0:01:08.200 --> 0:01:10.280 was announced to be a global pandemic, and the US 0:01:10.360 --> 0:01:14.040 wasn't really strongly affected. However, if we look belon beyond 0:01:14.160 --> 0:01:18.480 the or below the aggregant number, particularly on expectations, we 0:01:18.520 --> 0:01:22.120 saw already a very significant weakening from hundred and eight 0:01:22.200 --> 0:01:25.640 to eight point two in March, so that's a big decline. 0:01:25.959 --> 0:01:29.080 So even in early March, consumers were already getting very 0:01:29.120 --> 0:01:32.080 concerned about the outlook and obviously that we'll only have 0:01:32.080 --> 0:01:34.320 strength and over the last few weeks, well, this has 0:01:34.360 --> 0:01:36.880 been an unprecedented period on a lot of different levels, 0:01:37.040 --> 0:01:39.920 one of which is just the speed of which this 0:01:39.959 --> 0:01:43.560 has hit and changed the whole economic backdrop. So it's 0:01:43.560 --> 0:01:45.960 sort of it is difficult to cling to some of 0:01:46.000 --> 0:01:48.920 the previous leading indicators when you look at some of 0:01:48.920 --> 0:01:52.440 the indicators in real time. We saw the jobless claims 0:01:53.000 --> 0:01:55.400 last week. We're expecting more data on that front. We've 0:01:55.400 --> 0:01:58.720 gotten regional FED measures coming out showing one dire picture 0:01:58.760 --> 0:02:01.880 after another. It's the most likely economic scenario that you 0:02:01.960 --> 0:02:04.680 see going forward. Oh, I think, so, first of all, 0:02:04.680 --> 0:02:07.240 when we look at the index wherret stands now, I 0:02:07.280 --> 0:02:10.520 think we'll see significantly more declines happening over the next 0:02:10.560 --> 0:02:13.920 few weeks and months. Uh, even compared to the financial crisis, 0:02:14.000 --> 0:02:16.440 we're not yet at that low point, you know. At 0:02:16.480 --> 0:02:19.160 that time, the expectations index dropped at some point of 0:02:19.200 --> 0:02:21.160 the thirty and we're still at a t a. So 0:02:21.200 --> 0:02:23.760 there's still a very long way to go in terms 0:02:23.840 --> 0:02:27.880 of declining confidence going forward. The really couple of scenarios 0:02:27.919 --> 0:02:29.800 now to your question, leads out on sort of where 0:02:29.800 --> 0:02:32.560 we're going. Really a couple of scenarios to think about now. 0:02:32.639 --> 0:02:34.800 One is indeed that we will see this very deep 0:02:34.840 --> 0:02:38.240 contraction happening for at least a not a month, if 0:02:38.280 --> 0:02:41.040 not perhaps six weeks or two months, but then see 0:02:41.120 --> 0:02:44.720 a fairly strong v bound kind of recovery. Most of 0:02:44.760 --> 0:02:47.360 the forecast are still sort of working on that scenario 0:02:47.520 --> 0:02:49.480 that we will be able to begin to open up 0:02:49.480 --> 0:02:53.560 the economy again over the summer. Still leaves the question 0:02:53.600 --> 0:02:55.280 what will happen after the summer in the case of 0:02:55.400 --> 0:02:58.120 researchens of cases. But I have to say that I 0:02:58.120 --> 0:03:01.320 think it's actually more likely that, uh, you know, the 0:03:02.080 --> 0:03:05.760 contraction may continue well into the third quarter. Um, it's 0:03:05.880 --> 0:03:09.760 very likely that you know, you know, containment measures and 0:03:09.800 --> 0:03:13.640 social distancing measures will continue even if the economy opens up. 0:03:13.680 --> 0:03:16.200 A lot of that will remain in place. Businesses have 0:03:16.320 --> 0:03:18.400 to be prepared for a lot of regular free pressure 0:03:18.400 --> 0:03:21.520 from authorities about under what conditions that can open up 0:03:21.680 --> 0:03:23.600 in order to avoid the spread of the virus. So 0:03:23.680 --> 0:03:26.799 I think this is really a much longer period. Therefore, 0:03:27.040 --> 0:03:29.480 even the third quarter may still be a fairly weak quarter, 0:03:29.520 --> 0:03:31.560 and you may not really begin to see recovery in 0:03:31.600 --> 0:03:34.880 the economy of any significance until the final quarter of 0:03:34.920 --> 0:03:38.080 the year. So bart, give us a your assessment kind 0:03:38.080 --> 0:03:40.800 of the fiscal stimulus we've seen me at the two 0:03:40.840 --> 0:03:43.200 trillion dollar bill, and now there's talk of another two 0:03:43.240 --> 0:03:47.160 trillion dollar perhaps infrastructure bill. How how do you expect 0:03:47.200 --> 0:03:50.360 that to impact the economy. Well, it will of course 0:03:50.400 --> 0:03:53.480 help to sort of, um, you know, put the bottom 0:03:53.560 --> 0:03:55.920 into the decline here. Um. You know, some of this 0:03:56.040 --> 0:03:58.160 money will go to small businesses who are sort of 0:03:58.160 --> 0:04:01.120 in immediate need of an end of support. If they 0:04:01.120 --> 0:04:04.280 don't get that trenencial support, they will have to close down. Uh, 0:04:04.320 --> 0:04:06.120 and that would make it much more difficult for them 0:04:06.120 --> 0:04:09.160 to actually open up again. Wants to recovery start. So 0:04:09.200 --> 0:04:11.200 I think we'll see some effects there. It will not 0:04:11.280 --> 0:04:14.480 necessarily excelerate growth now, but it will have these businesses 0:04:14.520 --> 0:04:17.960 to be able to recover again once we get through 0:04:17.960 --> 0:04:21.880 this crisis. The other part is to support to unemployment 0:04:22.320 --> 0:04:26.359 and to income. Again, low income households will need the 0:04:26.400 --> 0:04:28.680 money in order just to be able to pay their 0:04:28.720 --> 0:04:31.760 basic expenses. UH. Sort of in the medium income level, 0:04:32.240 --> 0:04:34.359 it's very likely as long as people can pay their 0:04:34.400 --> 0:04:37.279 basic expenses and their mortgages and everything else, that will 0:04:37.279 --> 0:04:40.599 put you know, extra support into savings because they will 0:04:40.640 --> 0:04:44.599 be prepared for more difficult times to come. And therefore 0:04:44.640 --> 0:04:46.640 some of these effects on the consumption site may be 0:04:46.760 --> 0:04:49.120 delayed and we will not begin to see anything of 0:04:49.160 --> 0:04:51.279 that really picking in into the second half of the year. 0:04:51.839 --> 0:04:54.120 Bart when we talk about the consumer at accounts for 0:04:54.160 --> 0:04:56.800 about two thirds of the American economy, and there was 0:04:56.839 --> 0:04:58.880 a survey out from bank Rate that I was looking 0:04:58.920 --> 0:05:02.800 at this morning showing that more than half of Americans 0:05:02.839 --> 0:05:07.520 are reducing their consumptions even online uh in response to 0:05:07.560 --> 0:05:11.360 the coronavirus crisis. Just to show up enough capital heading 0:05:11.360 --> 0:05:15.080 into this period, how big of a recession. Do you 0:05:15.080 --> 0:05:18.840 think the US is going to have this year? Oh well, 0:05:18.880 --> 0:05:20.960 whatever way with the finery recession, this is going to 0:05:21.040 --> 0:05:23.920 be a recession, whether it is multiple months of contraction 0:05:24.240 --> 0:05:26.960 or uh, you know, a level of GDP by the 0:05:27.080 --> 0:05:30.040 end of the year, which can be you know, between 0:05:30.279 --> 0:05:33.040 five and seven percent lower than what it was at 0:05:33.040 --> 0:05:34.920 the beginning of the year. So this is a This 0:05:35.000 --> 0:05:37.320 is a big recession, and it's bigger than what we've 0:05:37.360 --> 0:05:39.520 seen in two oh eight and and and two oh nine. 0:05:39.560 --> 0:05:42.680 But it's a very kind of unique recession in terms 0:05:42.720 --> 0:05:45.120 of recent history because basically what happened here is the 0:05:45.160 --> 0:05:47.920 economy has been shut down. Uh, that's where we are 0:05:48.000 --> 0:05:50.599 right now at the moment. This is primarious supply shock 0:05:50.760 --> 0:05:54.760 because you know, people just can't go anywhere. But gradually 0:05:54.760 --> 0:05:57.600 that supply shop will turn into a demand problem and 0:05:57.600 --> 0:05:59.880 that this at once. Once we can begin to open 0:06:00.080 --> 0:06:02.800 the economy, the real question is how quickly can that 0:06:02.920 --> 0:06:06.479 consumer come back online? When? When? When? When are they 0:06:06.600 --> 0:06:09.599 ready to start spending again? Are they allowed to be spending, 0:06:09.640 --> 0:06:11.400 to be able to go out to the shops and 0:06:11.440 --> 0:06:13.920 the restaurants and everything else, And how willing are they 0:06:13.920 --> 0:06:16.960 to spend because they're taking a big hit at the moment, 0:06:17.160 --> 0:06:19.800 and they are being told that if they're not careful, 0:06:20.080 --> 0:06:22.360 they have researchers of cases later in the year. So 0:06:22.400 --> 0:06:25.600 I think people will be cautious in order to uh 0:06:25.720 --> 0:06:29.440 to uh to to to start spending again, and I 0:06:29.520 --> 0:06:32.760 think therefore again the recovery will be a difficult recovery 0:06:32.760 --> 0:06:35.039 in a slow one. Bart van Ark, thank you so 0:06:35.120 --> 0:06:37.400 much for being with us, Bart van Ark, chief economists 0:06:37.720 --> 0:06:42.839 at the conference board time to check in with Bloomberg. 0:06:42.920 --> 0:06:46.560 Opinion were joined by opinion Calumust Julian Lee. It covers 0:06:46.600 --> 0:06:49.760 off things oil for Bloomberg Opinion joining Julian, thanks so 0:06:49.839 --> 0:06:53.719 much for joining us. We've seen this incredible decline in 0:06:53.960 --> 0:06:56.040 crewde We've got you know, w T I crede about 0:06:56.040 --> 0:07:00.240 twe barrel right now. I know it's supplying, I know 0:07:00.360 --> 0:07:03.200 it's demanded. Give us a sense of how much of 0:07:03.240 --> 0:07:06.560 each is really driving oil down here. I think at 0:07:06.600 --> 0:07:10.200 the moment it's it's mostly demand. Um. You know, we've 0:07:10.240 --> 0:07:13.520 had the Saudis and the Russians threatening to open the taps, 0:07:13.600 --> 0:07:17.480 and we're starting to see some of that oil perhaps 0:07:17.520 --> 0:07:21.840 beginning to move, particularly out of Saudi Arabia. They seem 0:07:21.920 --> 0:07:26.000 to have boosted shipments to storage tanks that they lease 0:07:26.080 --> 0:07:29.680 in the Mediterranean. Um, we're seeing a little bit of 0:07:29.720 --> 0:07:32.920 an increase in shipments going towards the United States, but 0:07:33.000 --> 0:07:36.360 none of that oil has arrived yet. What we're really 0:07:36.400 --> 0:07:39.480 seeing at the moment at least, is a response to 0:07:40.480 --> 0:07:44.360 a collapse in demand. Um. You know, there are estimates 0:07:44.400 --> 0:07:48.320 that demand this week is down by about twenty six 0:07:48.400 --> 0:07:53.960 percent globally. That's as if the entire United States, Canada, Mexico, 0:07:54.520 --> 0:07:57.880 all of Central America, and all of the Caribbean stopped 0:07:57.960 --> 0:08:00.560 using any oil at all. Well, it's kind of what 0:08:00.600 --> 0:08:02.040 it feels like. I mean, you look up and there 0:08:02.080 --> 0:08:03.920 are no airplanes in the sky, and you look out 0:08:03.920 --> 0:08:05.680 on the street here and there are no cars going 0:08:05.720 --> 0:08:09.920 by except for except for the horrible whale of ambulances 0:08:10.080 --> 0:08:14.800 which we've been hearing as people are suffering throughout the city. 0:08:14.840 --> 0:08:17.720 I'm just trying to understand how much pain has been 0:08:17.760 --> 0:08:19.880 priced in, given the fact that we're running out of 0:08:19.920 --> 0:08:22.600 storage and that Saudi Arabia seems to have no intention 0:08:22.640 --> 0:08:28.600 of stopping with the production. I think obviously a lot 0:08:28.640 --> 0:08:30.440 has been priced in. I mean, as you said, we're 0:08:30.440 --> 0:08:33.839 seeing you know, w T I down around twenty bucks 0:08:33.840 --> 0:08:37.319 the barrel. But some of the inland crews that are 0:08:37.360 --> 0:08:41.640 finding it difficult to access storage space are are even 0:08:41.679 --> 0:08:45.080 now trading in single digits UM. So there are there 0:08:45.080 --> 0:08:49.520 are a lot below the the international benchmarks UM. And 0:08:49.679 --> 0:08:51.640 you know, we're as you say, we're not seeing any 0:08:51.800 --> 0:08:56.040 end to the pressure. We're not seeing any significant nuptick 0:08:56.120 --> 0:09:00.840 in in road traffic. UM. We're not seeing any of 0:09:00.960 --> 0:09:04.840 the airline starting to talk about getting some of their 0:09:04.880 --> 0:09:07.400 fleet flying again. In fact, some of the you know, 0:09:07.520 --> 0:09:10.839 the biggest low cost carriers in Europe have grounded their 0:09:11.040 --> 0:09:14.120 entire fleets in the last couple of days. So we're 0:09:14.120 --> 0:09:17.600 really not yet seeing any pickup in demand. And we 0:09:17.760 --> 0:09:21.000 still have this this wave of additional oil that has 0:09:21.040 --> 0:09:26.000 been promised or threatened making its way towards consumers who 0:09:26.000 --> 0:09:30.160 don't want it. So, Julian, we had President Trump speak 0:09:30.200 --> 0:09:34.560 with Mr Putin yesterday. Any sense of what they talked 0:09:34.559 --> 0:09:36.760 about or whether there can be any movement there on 0:09:36.800 --> 0:09:41.319 a part of Russia, UM, I haven't got any detailed 0:09:41.360 --> 0:09:44.000 sense of what they talked about. I mean we were 0:09:44.040 --> 0:09:46.840 hearing that they talked about energy and they talked about 0:09:47.679 --> 0:09:52.800 the virus and responding to it. UM. My own take 0:09:52.880 --> 0:09:56.479 on it is that nobody is going to act unilaterally. 0:09:56.559 --> 0:10:00.200 Russia isn't going to do anything if it doesn't see 0:10:00.200 --> 0:10:03.960 other people, um sort of playing their part. And I 0:10:04.000 --> 0:10:08.040 think those other people include the United States, m Saudi 0:10:08.040 --> 0:10:10.959 Arabia and Russia. Both see that their actions over the 0:10:11.040 --> 0:10:15.120 last four or five years have helped to spur a 0:10:15.280 --> 0:10:18.760 doubling of US oil production, and quite frankly, I think 0:10:18.800 --> 0:10:23.280 their view is that this is too big um for 0:10:23.320 --> 0:10:25.560 anybody to deal with on their own. We're all in 0:10:25.600 --> 0:10:28.280 this together. Um. If we're going to come back, we're 0:10:28.280 --> 0:10:30.720 all going to come back, and that has to include 0:10:30.880 --> 0:10:34.880 American oil producers too. Julian, if we could take a 0:10:34.880 --> 0:10:37.880 step back and talk about what happens when this period 0:10:37.880 --> 0:10:42.199 of time is over, do you foresee the destruction and 0:10:42.320 --> 0:10:46.680 demand being something with permanent ramifications, people going to other 0:10:46.720 --> 0:10:49.960 sources of energy or changing their habits, or do you 0:10:50.000 --> 0:10:52.680 think that once things get back on track, the economy 0:10:52.760 --> 0:10:56.120 is globally start recovering, we're gonna see oil bounce back 0:10:56.160 --> 0:11:01.240 up a barrel, maybe even sixty dollars a barrel. I 0:11:01.320 --> 0:11:05.320 certainly think we're we're going to see a recovery. Whether 0:11:05.360 --> 0:11:08.840 it's a complete recovery, I think is too early to 0:11:08.920 --> 0:11:12.600 tell yet. But I think that if this is a 0:11:12.720 --> 0:11:17.360 relatively short term disruption, and if if things are picking 0:11:17.480 --> 0:11:21.200 back up off the off the floor by you know, 0:11:21.280 --> 0:11:24.280 even the autumn or or the end of this year, 0:11:25.320 --> 0:11:28.320 I don't think that's long enough for people to have 0:11:28.440 --> 0:11:32.800 fundamentally changed their habits. People are going to go back 0:11:32.800 --> 0:11:36.480 to driving, They're probably going to go back to flying 0:11:36.520 --> 0:11:40.880 to the extent that that restrictions allow them to do. So. Um, 0:11:40.920 --> 0:11:45.480 I think it takes a a long term disruption for 0:11:45.520 --> 0:11:48.640 people to really change their habits. I I don't know 0:11:48.720 --> 0:11:52.240 of anyone at the moment who's saying, oh, I'll never 0:11:52.280 --> 0:11:55.600 fly again, or I'll never travel overseas again. So I 0:11:55.640 --> 0:11:59.560 think things will come back. What the industry is going 0:11:59.600 --> 0:12:02.200 to look like when that happens, in the ability to 0:12:02.360 --> 0:12:05.040 meet that rising demand, I think it's going to be 0:12:05.080 --> 0:12:07.880 another question. Julian Lee, thank you so much for being 0:12:07.880 --> 0:12:11.920 with us. Julian Lee Limbercampeian columnists covering all things oil related. 0:12:15.920 --> 0:12:18.960 It was the worst month for US equities, frankly for 0:12:19.000 --> 0:12:21.880 global equity since two thousand and eight, Europe fair to 0:12:22.040 --> 0:12:26.080 even worse. Emerging market bonds had their worst month, worst 0:12:26.200 --> 0:12:31.320 quarters since The superlatives continue and as an investor, there's 0:12:31.360 --> 0:12:33.840 a question do you buy the dip as so many 0:12:33.880 --> 0:12:36.440 have been conditioned to do over the past decade, or 0:12:36.520 --> 0:12:39.840 is this time different as the entire economic landscape has 0:12:39.880 --> 0:12:44.600 profoundly shifted. Scott Clemens, chief investment strategist at Brown Brothers Harriman, 0:12:44.720 --> 0:12:47.320 joining us from Pittsburgh. Scott, thank you so much for 0:12:47.400 --> 0:12:50.200 being with us. I want to start there. How much 0:12:50.240 --> 0:12:52.440 do you think it is time to buy the dip? 0:12:52.520 --> 0:12:55.360 And how much are we still reeling from an economic 0:12:55.400 --> 0:12:57.960 shock that we cannot get our arms around and may 0:12:57.960 --> 0:13:00.800 not be fully priced in? Good morning, Lisa. I think 0:13:00.800 --> 0:13:03.880 the economic shock has been so quick and the markets 0:13:03.880 --> 0:13:06.760 have certainly reflected that that just in the past week 0:13:06.880 --> 0:13:09.280 or so, investors are beginning to sort of gather their 0:13:09.280 --> 0:13:12.079 thoughts about this. I'm not sure if we formed the 0:13:12.120 --> 0:13:14.600 bottom last week or not. You're never sure until well 0:13:14.679 --> 0:13:17.760 after the fact. I would say for investors focused on 0:13:17.800 --> 0:13:21.760 the long term, this kind of market disruption does provide 0:13:21.760 --> 0:13:24.000 a good opportunity, may not be the best, doesn't mean 0:13:24.000 --> 0:13:26.000 the market won't move lower, but it does provide a 0:13:26.000 --> 0:13:30.319 good opportunity to raise your allocation to equities. So Scott's 0:13:30.360 --> 0:13:32.960 give us a sense here we've seen the Federal Reserve 0:13:33.480 --> 0:13:36.920 Act really, I think pretty admirably here. Quickly they're out 0:13:36.960 --> 0:13:39.640 in front. One could argue, you know, using a lot 0:13:39.720 --> 0:13:42.760 of the tools in their toolbox. Give us a sense 0:13:42.760 --> 0:13:46.120 of what the FED has done from your perspective, Well, Paul, 0:13:46.160 --> 0:13:49.240 they've thrown the entire to two thousand and a playbook 0:13:49.280 --> 0:13:51.920 at the market. The differences. They've done it in about 0:13:52.040 --> 0:13:54.440 three weeks, whereas in two thousand and eight it took 0:13:54.440 --> 0:13:56.680 them three or four months to do it. If you 0:13:56.760 --> 0:13:59.600 look back at where FED policy was on the first 0:13:59.679 --> 0:14:03.440 day of March of the year, thirty one days ago, 0:14:03.520 --> 0:14:07.680 it is astonishing how much that they have done and 0:14:07.679 --> 0:14:09.920 and I think it's working. I think we can give 0:14:09.960 --> 0:14:13.280 them credit. The kind of volatility and spread widening that 0:14:13.360 --> 0:14:16.640 we saw on fixed income markets, even in the highest quality, 0:14:16.679 --> 0:14:20.000 shortest duration fixed income markets five or six days ago, 0:14:20.080 --> 0:14:22.600 has begun to wash out. I think it's a good 0:14:22.640 --> 0:14:25.080 sign that the Fed last week did when we use 0:14:25.120 --> 0:14:28.160 the word only a hundred and fifteen billion dollars of 0:14:28.200 --> 0:14:32.760 repurchased operations. That's down from half a trillion in each 0:14:32.800 --> 0:14:34.920 of the two previous weeks. Doesn't mean we're out of 0:14:34.960 --> 0:14:37.640 the woods yet, but FED policy is working to help 0:14:37.680 --> 0:14:40.880 financial markets function more effectively. All right, So let's talk 0:14:40.920 --> 0:14:44.400 about how people are investing. We have seen a rush 0:14:44.440 --> 0:14:49.040 of cash which has been basically preserved or hoarded, we 0:14:49.040 --> 0:14:52.920 should say, over the past few weeks, cash flooding into 0:14:52.960 --> 0:14:56.240 the investment grade corporate bottom market. Is the FED backstops 0:14:56.560 --> 0:15:00.520 those securities. I'm just wondering whether you're eating that and 0:15:00.520 --> 0:15:04.800 you're recommending people boost their allocations to that area slowly. 0:15:04.880 --> 0:15:07.000 I don't think that it's time to back up the 0:15:07.040 --> 0:15:10.760 proverbial truck, because as as you've continually reported on, there's 0:15:10.800 --> 0:15:13.760 probably more bad news to come, both on the economic 0:15:13.800 --> 0:15:16.680 front and on the healthcare front as well. So we 0:15:16.840 --> 0:15:19.880 are guiding our clients at Bromer this's harement to take 0:15:19.920 --> 0:15:22.520 advantage on a slow basis. If there is money that 0:15:22.560 --> 0:15:25.240 they're willing to put into the markets or rebalancing, that 0:15:25.320 --> 0:15:28.760 should be done back to an asset allocation policy to 0:15:28.840 --> 0:15:32.200 do so over time, and by overtime I mean several 0:15:32.720 --> 0:15:35.440 months or maybe several quarters as well. Cres is a 0:15:35.440 --> 0:15:38.520 crisis that's still in the very early days. We are 0:15:38.560 --> 0:15:43.040 finding opportunities throughout equity markets. I would say in fixed income, 0:15:43.040 --> 0:15:47.040 it's probably more in non investment grade or distressed debt 0:15:47.600 --> 0:15:50.120 where investors should tread carefully, but those were the real 0:15:50.160 --> 0:15:52.800 opportunities will begun to arise. You just reported on Carnival 0:15:52.960 --> 0:15:56.320 spond offering them maybe an example of that kind of opportunity. Wait, wait, wait, 0:15:56.360 --> 0:15:57.880 hold on one second. I'm not going to let you 0:15:57.880 --> 0:16:00.880 get away with other words you're saying by Carnival three 0:16:00.960 --> 0:16:04.560 year bonds with a coupon of twelve and a half, 0:16:04.600 --> 0:16:06.960 you're all in. No, I'm not all saying that. I'm 0:16:06.960 --> 0:16:09.840 saying about the example of a kind of opportunity. To 0:16:10.320 --> 0:16:13.520 see a lot more of that come. Taking advantage of 0:16:13.520 --> 0:16:16.160 that for careful and cautious and patient investors is probably 0:16:16.160 --> 0:16:18.440 a good idea. Carnival is just the earliest example of 0:16:18.480 --> 0:16:21.880 that kind of trend. So, Scott, So a lot of 0:16:21.880 --> 0:16:24.240 people are here trying to sense over the last several days, 0:16:24.720 --> 0:16:26.880 has the market bottom did we see that last week? 0:16:27.000 --> 0:16:30.960 Or is it forming a bottom or is it typical 0:16:31.080 --> 0:16:33.640 of just a little bounce in what is a longer 0:16:33.720 --> 0:16:36.040 term bear market. How do you think about that? Historically? 0:16:36.320 --> 0:16:38.440 I go back and look at our experience in two 0:16:38.520 --> 0:16:40.240 thousand and eight, and I know that there are a 0:16:40.240 --> 0:16:44.000 lot of differences. There always are differences in the particulars, 0:16:44.160 --> 0:16:47.640 but the common theme is human emotion in the battle 0:16:47.760 --> 0:16:51.560 between fear and greed, and that's playing out again. Recalling 0:16:51.560 --> 0:16:53.480 two thousand and eight, that a lot of the FED 0:16:53.560 --> 0:16:56.880 policy and fiscal policy was in place by early October 0:16:56.920 --> 0:16:59.840 of that year. The market responded. There were in October 0:17:00.000 --> 0:17:04.919 early November two separate rallies in the market, only for 0:17:04.960 --> 0:17:07.080 the market to bottom out at a lower level than 0:17:07.080 --> 0:17:09.720 a lower level, before ultimately finding a bottom in March 0:17:09.760 --> 0:17:12.600 of two thousand and nine. So it is not uncommon 0:17:12.680 --> 0:17:15.639 to have these kind of relief rallies within a longer 0:17:15.720 --> 0:17:19.200 term bear market. So we're cautioning investors not to get 0:17:19.200 --> 0:17:21.480 too carried away with the rally that we've had over 0:17:21.480 --> 0:17:24.360 the past couple of days. Scott, if you just take 0:17:24.359 --> 0:17:26.919 a look at the balance of the calls and the 0:17:26.960 --> 0:17:29.600 emotion that you get from investors that you deal with 0:17:29.600 --> 0:17:33.560 from clients, is the balance more heavily waited to fear 0:17:33.720 --> 0:17:36.840 or is it more heavily waited to greed, or at 0:17:36.920 --> 0:17:40.000 least the sense of buying the dip always has worked. 0:17:40.320 --> 0:17:43.520 We have a dip, let's get out there and buy, 0:17:44.200 --> 0:17:46.119 you know. But it depends on what you mean by work. 0:17:46.320 --> 0:17:50.040 The longer term, your investment time horizon is the easier 0:17:50.119 --> 0:17:51.840 it is to say, yes, this is a time to 0:17:51.880 --> 0:17:53.720 put money in the market. So we went back and 0:17:53.760 --> 0:17:58.320 looked at the hypothetical unluckiest investor ever. What if you 0:17:58.359 --> 0:18:00.840 had allocated capital to the market at the peak of 0:18:00.840 --> 0:18:03.280 the dot com bubble. What if you had bought into 0:18:03.280 --> 0:18:08.200 equity markets the day before Lehman Brothers declared bankruptcy Charlie 0:18:08.280 --> 0:18:12.840 Brown levels of unlucky investing timing, And yet with both 0:18:12.880 --> 0:18:15.680 of those time frames, ten or fifteen years down the road, 0:18:15.880 --> 0:18:18.679 with a bad entry point, investors had still doubled or 0:18:18.680 --> 0:18:21.479 tripled their money. So the answer to whether or not 0:18:21.560 --> 0:18:23.440 this is the time to get into the markets or 0:18:23.480 --> 0:18:27.040 not depends on the individual investor's temperament and time horizon 0:18:27.359 --> 0:18:29.280 more than it does on calling a bottom in the 0:18:29.280 --> 0:18:33.639 market itself. Scott Clemens, thank you so much for joining us. 0:18:33.720 --> 0:18:38.040 Really appreciate that. Scott Clements, UH Chief Investment strategies for 0:18:38.080 --> 0:18:41.280 Brown Brothers, Harriman giving us his thoughts on the market, 0:18:41.280 --> 0:18:44.959 and interesting headline just crossing it the Bloomberg Lisa. President 0:18:44.960 --> 0:18:48.760 Trump calls for two trilliant infrastructure package in the next 0:18:48.960 --> 0:18:51.879 relief bill. Yeah, this sort of is interesting. It's called 0:18:51.880 --> 0:18:55.879 it comes after Nancy Pelosi, how speaker always reportedly in 0:18:55.960 --> 0:18:59.720 talks to get together a second round of a fiscal 0:18:59.760 --> 0:19:02.879 bay out in the near future. President Trump, it seems 0:19:02.920 --> 0:19:05.760 like is weighing in trying to push that more into 0:19:05.800 --> 0:19:09.679 the infrastructure realm. Both are not mutually exclusive, right, but 0:19:09.720 --> 0:19:11.879 it does raise a question about whether we're going to 0:19:11.960 --> 0:19:15.159 get some sort of you know, w p A or 0:19:15.760 --> 0:19:17.960 c c C or you know, targeting back to the 0:19:18.040 --> 0:19:20.919 nine thirties and some of the public works programs that 0:19:21.040 --> 0:19:23.359 stemmed from that period of time. Are we going to 0:19:23.400 --> 0:19:25.120 see a redux of this and it's going to give 0:19:25.200 --> 0:19:28.080 fire to some of the infrastructure proposals that were out 0:19:28.119 --> 0:19:32.640 there well before anything about COVID nineteen was on the scene. Poll. Yeah, absolutely, 0:19:32.640 --> 0:19:35.760 And I think it's a prompt discussion of how much capital, 0:19:35.800 --> 0:19:38.520 how much cash should be put in the hands of consumers, 0:19:38.520 --> 0:19:41.080 particularly those that have been that have lost their jobs, 0:19:41.320 --> 0:19:45.159 versus how much aid should be given to companies versus 0:19:45.600 --> 0:19:48.439 how much should be potentially put in for infrastructure. So 0:19:48.480 --> 0:19:52.240 that will likely again that debate. And also how much 0:19:52.280 --> 0:19:55.440 does the economy need to be stimulated after the bailout? 0:19:55.680 --> 0:19:58.199 Key questions? Exactly right, exactly right. So looking at the 0:19:58.240 --> 0:19:59.639 markets here, we have a little bit of green on 0:19:59.720 --> 0:20:02.080 the screen, a little bit of stability, Lisa and I 0:20:02.119 --> 0:20:04.520 think we'll call it that right here. So but markets 0:20:04.520 --> 0:20:07.560 are up just slightly here. We'll have more coming up. 0:20:07.760 --> 0:20:14.280 This is Bloomberg. If you listen really closely, you can 0:20:14.560 --> 0:20:18.240 hear the helicopters hovering above you, ready to drop some cash. 0:20:18.359 --> 0:20:20.480 That is sort of the feeling out there is the 0:20:20.600 --> 0:20:24.320 US government passes one stimulus effort or bailout effort, if 0:20:24.359 --> 0:20:26.879 you want to call it that, that will deliver checks 0:20:27.160 --> 0:20:30.160 two Americans already in the works. He's get another one. 0:20:30.359 --> 0:20:33.440 And the question that I have been having persistently is 0:20:33.440 --> 0:20:36.920 is this inflationary or deflationary? Ira Jersey has a very 0:20:36.920 --> 0:20:40.160 strong view on this, chief US interestrate strategist for Bloomberg Intelligence, 0:20:40.160 --> 0:20:42.160 and I want to continue the conversation because a lot 0:20:42.200 --> 0:20:45.760 of people are struggling here thinking that normally when you 0:20:45.800 --> 0:20:49.439 print money that is inflationary, Why is the bond market 0:20:49.600 --> 0:20:53.480 saying the exact opposite. Yeah, I think for two reasons. 0:20:53.520 --> 0:20:57.480 I think one is that the quote unquote helicopter money 0:20:57.520 --> 0:21:00.520 that you just mentioned is really just replacing income and 0:21:00.600 --> 0:21:02.800 revenues that are going to be lost by a lot 0:21:02.880 --> 0:21:06.760 of businesses globally, because the way that money gets into 0:21:06.800 --> 0:21:10.239 the economy is the Federal Reserve creates base money, right 0:21:10.359 --> 0:21:13.359 or any central bank creates what's called base money, and 0:21:13.400 --> 0:21:17.000 then banks go out and then lend money to other people, 0:21:17.119 --> 0:21:20.080 to their to their customers, and that's how money flows 0:21:20.119 --> 0:21:23.240 into the system. In an environment like this, you're not 0:21:23.600 --> 0:21:26.440 creating um a lot of new money and a lot 0:21:26.480 --> 0:21:29.400 of loans that are going to be used to expand businesses. 0:21:29.400 --> 0:21:31.840