WEBVTT - Luxury Sector Hurt by Coronavirus

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<v Speaker 1>This is Bloomberg Business Week with Carol Messer and Jason

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<v Speaker 1>Kelly on Bloomberg Radios. In the market they actually make

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<v Speaker 1>made a fair amount of money this week. So let's

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<v Speaker 1>talk about the market outlook. Quincy Crosby is back with us.

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<v Speaker 1>She's chief market strategist at Prudential Financial based in Newark,

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<v Speaker 1>New Jersey, in our Bloomberg Interactive Broker Studio. Nice to

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<v Speaker 1>have you back with us. Thanks very much for having

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<v Speaker 1>me here. So, you know, we've been kind of talking

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<v Speaker 1>about a week where there were so many uncertainties and

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<v Speaker 1>kind of craziness, whether it was the Iowa Caucuses, whether

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<v Speaker 1>it's continued UM concern about the virus, just watching Tesla

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<v Speaker 1>go up, they go down, and yet investors continue to

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<v Speaker 1>push the market higher. Um, how do you explain that?

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<v Speaker 1>Explained interest rates so low? And we always talk about

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<v Speaker 1>liquidity in the market. Liquidity is strong, uh. And you know,

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<v Speaker 1>when you take term liquidity down to the most ground

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<v Speaker 1>your level, what we used to say was there's never

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<v Speaker 1>liquidity on the day you need. I mean, you can't

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<v Speaker 1>find someone to buy something from you. But the point

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<v Speaker 1>is that before you get to that point, you take

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<v Speaker 1>a look at the positives in terms of financial conditions,

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<v Speaker 1>low interest rates, credit is available, all of those, and

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<v Speaker 1>you have a consumer that has jobs. As we saw today,

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<v Speaker 1>the economic data releases have been surprising to the upside

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<v Speaker 1>for the most part again today, Yeah, exactly, And and

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<v Speaker 1>so you you weigh it, and what you try to

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<v Speaker 1>do is you try to look through the crisis, look

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<v Speaker 1>through an episode of a virus. And obviously sometimes you're wrong,

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<v Speaker 1>because we saw buying at the beginning of the week.

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<v Speaker 1>If this thing were to continue and spread and and

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<v Speaker 1>and and get much worse, the market is going to

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<v Speaker 1>sell off quite a bit more. So maybe you were early.

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<v Speaker 1>But nonetheless, the buy on the dip mentality is there.

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<v Speaker 1>It's been ingrained in us, is it just? I mean,

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<v Speaker 1>if we were not in such a low rated vironment,

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<v Speaker 1>would that be a whole different story, even if you

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<v Speaker 1>still had a strong jobs market and so on and

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<v Speaker 1>so forth, would we be telling a different story. Yes,

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<v Speaker 1>If if the FED were poised to be in continue

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<v Speaker 1>to raise rates, of course, there'd be worried that the

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<v Speaker 1>raising of rates did not match up with an economy

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<v Speaker 1>that was suffering from global growth concerns. And so you know,

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<v Speaker 1>one of the places where we've seen people get worried.

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<v Speaker 1>Quincy is luxury names. And you think about Hong Kong,

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<v Speaker 1>even before this virus, with the protest there in Hong Kong,

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<v Speaker 1>how do you look at that part of the market. Well,

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<v Speaker 1>you take a look at that, and you saw today

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<v Speaker 1>some of the down grades because of that, because the

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<v Speaker 1>Chinese are not traveling, and it's not even in places

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<v Speaker 1>where it's particularly Chinese. It's where they traveled to where

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<v Speaker 1>the pressure husband and that stands to reason. And the

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<v Speaker 1>question always becomes do you think this is going to

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<v Speaker 1>be better in three months time? And what we see

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<v Speaker 1>happening is everyone is comparing it with czars. But it

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<v Speaker 1>was a different scenario back then. China wasn't as much

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<v Speaker 1>an important part of the global economy, by the way,

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<v Speaker 1>it was about four point five eight percent versus today

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<v Speaker 1>where it's over nineteen percent of the global economy, and

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<v Speaker 1>they were pushing much more stimulus with cheap loans into

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<v Speaker 1>that economy. So you had a V shaped recovery. How

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<v Speaker 1>do we know we're going to have a V shaped

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<v Speaker 1>recovery now? That said, China is pushing stimulus in already

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<v Speaker 1>and one of the catalysts to get this market moving

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<v Speaker 1>this week was we saw liquidity coming into the Chinese market.

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<v Speaker 1>They are going to continue that until they have uh

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<v Speaker 1>you know the green shoots that we saw come back.

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<v Speaker 1>But I mean, I think that's been the story, right

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<v Speaker 1>Quincy Quincy over the last year, not the last year,

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<v Speaker 1>at last decade, certainly off the crisis that all of

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<v Speaker 1>the world central banks when there's some kind of crisis,

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<v Speaker 1>if policy makers can't get their act together, they're going

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<v Speaker 1>to be there to prop up the financial markets or

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<v Speaker 1>whatever needs to be done to make sure things don't

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<v Speaker 1>come undone like we saw during the crisis. That's right.

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<v Speaker 1>I mean last year everyone talks about in rest rate

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<v Speaker 1>cuts last year from forty nine central banks. Central banks

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<v Speaker 1>are continuing to lower rates this year. Uh, and if

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<v Speaker 1>the slowdown continues, you're going to see more rate cuts.

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<v Speaker 1>The chairman is going to testify this week. Uh. The

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<v Speaker 1>report came out and talks about the global slowdown, the catalyst.

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<v Speaker 1>They're going to ask him, what are you going to

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<v Speaker 1>do what? And concerns. We were talking about this about

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<v Speaker 1>an hour ago. Are Vin Signorella just saying because that

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<v Speaker 1>that FED report that came out today talking about concerns

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<v Speaker 1>about how low interest rates had elevated asset valuation. Is

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<v Speaker 1>not the first time that we've heard the Fed say this,

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<v Speaker 1>but it was interesting that they kind of pushed this

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<v Speaker 1>a little bit further. Yes, and that's that's always been

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<v Speaker 1>a concern, by the way, for Chairman Powell when he

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<v Speaker 1>was on the board, he would give speeches lower for

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<v Speaker 1>longer is going to cause asset bubbles at some point,

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<v Speaker 1>and he said, have to get rates to match where

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<v Speaker 1>the economy is. He tried that. You saw how that

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<v Speaker 1>worked out. Give us one and you know, I don't know.

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<v Speaker 1>I know you can always name stocks and things because

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<v Speaker 1>there one interesting investment idea that's caught your attention right

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<v Speaker 1>now in this particular environment, in this environment where there's

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<v Speaker 1>a where there's a slow projected slow down. And if

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<v Speaker 1>I had to worry gold gold has is the we've

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<v Speaker 1>talked about gold is like a lot of people have

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<v Speaker 1>moved into gold, big time. They moved they moved into

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<v Speaker 1>gold when they move into treasuries. And then what typically

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<v Speaker 1>happens is that this word to continue and their more concerns.

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<v Speaker 1>Utilities get the bed. Utilities are overbought. But nonetheless you

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<v Speaker 1>will put money because the tenure yield comes down. It's

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<v Speaker 1>the consummate bond surrogate along with reads. But you're going

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<v Speaker 1>to look for something that is going to going to

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<v Speaker 1>hold up, and that's what's going to hold up. And

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<v Speaker 1>you know, and as you heard earlier today where you're

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<v Speaker 1>just referring to that, the algorithms come in. You don't

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<v Speaker 1>even have a chance to move in. The algorithms will

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<v Speaker 1>do the job for you the minute the headline is

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<v Speaker 1>quasi negative. Yeah, yeah, totally exactly. All right, Quincy Crosby,

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<v Speaker 1>thank you so much, Chief Market Strategies for Prudential Financial

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<v Speaker 1>based over there in Newark, New Jersey. Here with us

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<v Speaker 1>in New York City today