Speaker 1: This is Bloomberg Business Week with Carol Messer and Jason
Speaker 1: Kelly on Bloomberg Radios. In the market they actually make
Speaker 1: made a fair amount of money this week. So let's
Speaker 1: talk about the market outlook. Quincy Crosby is back with us.
Speaker 1: She's chief market strategist at Prudential Financial based in Newark,
Speaker 1: New Jersey, in our Bloomberg Interactive Broker Studio. Nice to
Speaker 1: have you back with us. Thanks very much for having
Speaker 1: me here. So, you know, we've been kind of talking
Speaker 1: about a week where there were so many uncertainties and
Speaker 1: kind of craziness, whether it was the Iowa Caucuses, whether
Speaker 1: it's continued UM concern about the virus, just watching Tesla
Speaker 1: go up, they go down, and yet investors continue to
Speaker 1: push the market higher. Um, how do you explain that?
Speaker 1: Explained interest rates so low? And we always talk about
Speaker 1: liquidity in the market. Liquidity is strong, uh. And you know,
Speaker 1: when you take term liquidity down to the most ground
Speaker 1: your level, what we used to say was there's never
Speaker 1: liquidity on the day you need. I mean, you can't
Speaker 1: find someone to buy something from you. But the point
Speaker 1: is that before you get to that point, you take
Speaker 1: a look at the positives in terms of financial conditions,
Speaker 1: low interest rates, credit is available, all of those, and
Speaker 1: you have a consumer that has jobs. As we saw today,
Speaker 1: the economic data releases have been surprising to the upside
Speaker 1: for the most part again today, Yeah, exactly, And and
Speaker 1: so you you weigh it, and what you try to
Speaker 1: do is you try to look through the crisis, look
Speaker 1: through an episode of a virus. And obviously sometimes you're wrong,
Speaker 1: because we saw buying at the beginning of the week.
Speaker 1: If this thing were to continue and spread and and
Speaker 1: and and get much worse, the market is going to
Speaker 1: sell off quite a bit more. So maybe you were early.
Speaker 1: But nonetheless, the buy on the dip mentality is there.
Speaker 1: It's been ingrained in us, is it just? I mean,
Speaker 1: if we were not in such a low rated vironment,
Speaker 1: would that be a whole different story, even if you
Speaker 1: still had a strong jobs market and so on and
Speaker 1: so forth, would we be telling a different story. Yes,
Speaker 1: If if the FED were poised to be in continue
Speaker 1: to raise rates, of course, there'd be worried that the
Speaker 1: raising of rates did not match up with an economy
Speaker 1: that was suffering from global growth concerns. And so you know,
Speaker 1: one of the places where we've seen people get worried.
Speaker 1: Quincy is luxury names. And you think about Hong Kong,
Speaker 1: even before this virus, with the protest there in Hong Kong,
Speaker 1: how do you look at that part of the market. Well,
Speaker 1: you take a look at that, and you saw today
Speaker 1: some of the down grades because of that, because the
Speaker 1: Chinese are not traveling, and it's not even in places
Speaker 1: where it's particularly Chinese. It's where they traveled to where
Speaker 1: the pressure husband and that stands to reason. And the
Speaker 1: question always becomes do you think this is going to
Speaker 1: be better in three months time? And what we see
Speaker 1: happening is everyone is comparing it with czars. But it
Speaker 1: was a different scenario back then. China wasn't as much
Speaker 1: an important part of the global economy, by the way,
Speaker 1: it was about four point five eight percent versus today
Speaker 1: where it's over nineteen percent of the global economy, and
Speaker 1: they were pushing much more stimulus with cheap loans into
Speaker 1: that economy. So you had a V shaped recovery. How
Speaker 1: do we know we're going to have a V shaped
Speaker 1: recovery now? That said, China is pushing stimulus in already
Speaker 1: and one of the catalysts to get this market moving
Speaker 1: this week was we saw liquidity coming into the Chinese market.
Speaker 1: They are going to continue that until they have uh
Speaker 1: you know the green shoots that we saw come back.
Speaker 1: But I mean, I think that's been the story, right
Speaker 1: Quincy Quincy over the last year, not the last year,
Speaker 1: at last decade, certainly off the crisis that all of
Speaker 1: the world central banks when there's some kind of crisis,
Speaker 1: if policy makers can't get their act together, they're going
Speaker 1: to be there to prop up the financial markets or
Speaker 1: whatever needs to be done to make sure things don't
Speaker 1: come undone like we saw during the crisis. That's right.
Speaker 1: I mean last year everyone talks about in rest rate
Speaker 1: cuts last year from forty nine central banks. Central banks
Speaker 1: are continuing to lower rates this year. Uh, and if
Speaker 1: the slowdown continues, you're going to see more rate cuts.
Speaker 1: The chairman is going to testify this week. Uh. The
Speaker 1: report came out and talks about the global slowdown, the catalyst.
Speaker 1: They're going to ask him, what are you going to
Speaker 1: do what? And concerns. We were talking about this about
Speaker 1: an hour ago. Are Vin Signorella just saying because that
Speaker 1: that FED report that came out today talking about concerns
Speaker 1: about how low interest rates had elevated asset valuation. Is
Speaker 1: not the first time that we've heard the Fed say this,
Speaker 1: but it was interesting that they kind of pushed this
Speaker 1: a little bit further. Yes, and that's that's always been
Speaker 1: a concern, by the way, for Chairman Powell when he
Speaker 1: was on the board, he would give speeches lower for
Speaker 1: longer is going to cause asset bubbles at some point,
Speaker 1: and he said, have to get rates to match where
Speaker 1: the economy is. He tried that. You saw how that
Speaker 1: worked out. Give us one and you know, I don't know.
Speaker 1: I know you can always name stocks and things because
Speaker 1: there one interesting investment idea that's caught your attention right
Speaker 1: now in this particular environment, in this environment where there's
Speaker 1: a where there's a slow projected slow down. And if
Speaker 1: I had to worry gold gold has is the we've
Speaker 1: talked about gold is like a lot of people have
Speaker 1: moved into gold, big time. They moved they moved into
Speaker 1: gold when they move into treasuries. And then what typically
Speaker 1: happens is that this word to continue and their more concerns.
Speaker 1: Utilities get the bed. Utilities are overbought. But nonetheless you
Speaker 1: will put money because the tenure yield comes down. It's
Speaker 1: the consummate bond surrogate along with reads. But you're going
Speaker 1: to look for something that is going to going to
Speaker 1: hold up, and that's what's going to hold up. And
Speaker 1: you know, and as you heard earlier today where you're
Speaker 1: just referring to that, the algorithms come in. You don't
Speaker 1: even have a chance to move in. The algorithms will
Speaker 1: do the job for you the minute the headline is
Speaker 1: quasi negative. Yeah, yeah, totally exactly. All right, Quincy Crosby,
Speaker 1: thank you so much, Chief Market Strategies for Prudential Financial
Speaker 1: based over there in Newark, New Jersey. Here with us
Speaker 1: in New York City today