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Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane.

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Speaker 1: Daily we bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. The

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Speaker 1: Dow a long from long way from ten percent correction

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Speaker 1: negative four percent, maybe negative five percent, and the VIX

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Speaker 1: that measurement twenty two point three two it was above

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Speaker 1: twenty three. To put that in perspective in the great

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Speaker 1: markets of Vix's twelve thirteen. Maybe you expand out in

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Speaker 1: the new regime of the VIX to seventeen or eighteen

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Speaker 1: and we come out as well. We have the perfect

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Speaker 1: guest to frame this this morning, Drewmatics, not only with

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Speaker 1: the clarin An Award winning economic work for years, but

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Speaker 1: it met life now driving forward their strategy as well.

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Speaker 1: Drewmatics of till your equity strategy into your first class economics.

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Speaker 1: How do you fit those two together right now? Well,

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Speaker 1: I you know, I think what you're seeing. Um, so

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Speaker 1: there's there's two factors. One, it's just kind of the

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Speaker 1: risk on, risk off, which we've talked about everyone decided

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Speaker 1: they didn't want to be long over the weekend. That

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Speaker 1: seemed to have been the right call this time. UM,

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Speaker 1: and so people went risk off and they were rewarded

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Speaker 1: for it. UM. I think if you look ahead, we

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Speaker 1: were kind of drifting in this environment where where margin

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Speaker 1: compression was beginning to happen. It looked like, in our

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Speaker 1: view at least corporations, we're begetting to pull back on

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Speaker 1: hiring and we're going to drift into a recession sometime

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Speaker 1: in kind of like the middle of next year. That

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Speaker 1: seemed to be, you know, that was the scenario we

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Speaker 1: were working with. UH. In the current environment, you have

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Speaker 1: to you have to maybe be pulling that forward a

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Speaker 1: little bit and thinking to yourself, you know, if these

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Speaker 1: trends continue in terms of disruptions to supply chains, that

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Speaker 1: that you know, maybe, um, maybe those margins compressed a

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Speaker 1: little faster, Maybe from back a little faster. Maybe they're

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Speaker 1: disinclined to invest heading into something where they have as

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Speaker 1: much uncer and t is the average consumer has drew.

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Speaker 1: Is the concept of a V shaped recovery dead? I no,

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Speaker 1: I but I think you know it requires the right

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Speaker 1: kind of construct. But I think what what you're pointing towards, though,

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Speaker 1: is something that I think a lot of people have

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Speaker 1: focused on, which is um for the vast majority of people,

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Speaker 1: not the vast majority of people, but for a lot

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Speaker 1: of people. And for I think the vast majority of

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Speaker 1: people on Wall Street actually who actually are are charged

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Speaker 1: with trading. Uh, two thousand eight is the recession. They know,

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Speaker 1: that's the only recession they know. They don't remember two

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Speaker 1: thousand one, where if you blinked you could have missed it. Um.

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Speaker 1: They don't remember kind of the slowdown. UM. So you know,

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Speaker 1: the the actual life experience for a lot of people

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Speaker 1: on Wall Street, it doesn't include recessions that don't look

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Speaker 1: like two thousand eight. And and so I don't think

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Speaker 1: a two thousand eight V shaped re car I don't

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Speaker 1: think a V shaped recovery is dead. But you're not

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Speaker 1: going to get one if you have a recession like

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Speaker 1: two thousand and eight. Fortunately we're not expecting one like

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Speaker 1: two thousand and eight. So, Drew, I mean a lot

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Speaker 1: of times we've been talking over the last week or two,

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Speaker 1: is this coronavirus kind of evolved and we saw a

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Speaker 1: lot of impacts, say in the commodity markets, in the

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Speaker 1: bond market, we didn't necessarily see a concern consistent in

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Speaker 1: the equity markets. Maybe we're seeing a little bit of

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Speaker 1: it today. Are you concerned that maybe the equity markets

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Speaker 1: is not are not discounting the long term economic impacts

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Speaker 1: of what a coronavirus could mean. Uh? You know, I

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Speaker 1: I think that they're struggling with it, and I think

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Speaker 1: that's that's the problem is this. Uh it's very hard

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Speaker 1: to assign weighted probabilities to all the different outcomes because

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Speaker 1: there's so many potential outcomes. Uh. And then if you

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Speaker 1: take that sector by sector and company by company, you

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Speaker 1: just you could drive yourself nuts going through the permutations. Um.

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Speaker 1: And so people then just go into do I want

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Speaker 1: to be along the market? Do I want to be

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Speaker 1: short the market? And people are now saying, hey, you

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Speaker 1: know what, I don't want to be along it because

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Speaker 1: I don't know what's going on and I think that

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Speaker 1: kind of environment is going to continue. So I'm struggling though,

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Speaker 1: because I'm looking right now at the FED model. This

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Speaker 1: has been one of the big humans for why to

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Speaker 1: buy stocks that basically bond yields go lower, making the

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Speaker 1: relative valuation case for stocks better. Today that valuation case

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Speaker 1: got a whole lot better. Even still, as thirty year

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Speaker 1: treasury yields go further into record low territory, why shouldn't

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Speaker 1: people buy this dip? Well, it's not a so we

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Speaker 1: don't really focus on equities in my life. But I'll

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Speaker 1: just I'll just say this. This is why you can't

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Speaker 1: just blindly follow models. Right. The question is the relationship

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Speaker 1: is a good and an interesting one to use as

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Speaker 1: a factor. All right, so components your model. But if

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Speaker 1: you just close your eyes and say it doesn't matter

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Speaker 1: why the bond yield is going down, then you're going

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Speaker 1: to put yourself into a situation where you're taking more

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Speaker 1: risk than you ever thought was possible. Uh, and you're

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Speaker 1: and you're blind to it because you're following this model

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Speaker 1: that just works off of why the yield is moving,

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Speaker 1: or that the yield is moving, rather than why is

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Speaker 1: the yield moving? And that's that's why I don't really

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Speaker 1: worry about artificial intelligence. You know, like I play my

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Speaker 1: son and you know in FIFA, and it's like the

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Speaker 1: A I never does what I wanted to do um

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Speaker 1: and and I'm thinking to myself, can't even run the

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Speaker 1: soccer probes explain why the Thoughts got crushed by Chelsea

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Speaker 1: this weekend for the failure, but my son was happy

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Speaker 1: to see the bluest triumph over over Tottenham. Oh really,

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Speaker 1: thank you? I mean John emails in where John John

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Speaker 1: emails in from Turks and Caicos No excuse me antigua

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Speaker 1: of course more. You know it's fancier Farrell, he wanted

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Speaker 1: he brought this up. Chelsea like crushed the Thoughts this weekend.

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Speaker 1: Farrell's not even Lisa's like, what I'm learning, I'm studying? Yeah,

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Speaker 1: she's yes, so am I let met me tell you

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Speaker 1: every day. This is really critical. You say that MetLife

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Speaker 1: isn't focused on uh stocks, that's because it's an adult

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Speaker 1: house focused on our futures. Do you assume going to

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Speaker 1: work every day that your actual assumption is going to

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Speaker 1: come down and that that locked in boggie rate that

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Speaker 1: we have is not going to be ex percent. It's

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Speaker 1: going to come down down, down, you know. I. I

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Speaker 1: think what we assume is, um, we have to plan

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Speaker 1: for every environment that we can imagine UM. And I

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Speaker 1: think when you think about the current world we've been

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Speaker 1: in for a long time, we've been in a very

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Speaker 1: low rate environment for a very long period of time,

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Speaker 1: and I think you know, the ongoing assumption you know

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Speaker 1: has been you know, you can't expect just because you

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Speaker 1: want you'ld to move higher, you can't expect that they

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Speaker 1: are going to move higher. Do you sell jump ons here? Uh?

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Speaker 1: You know, I leave that to our credit portfolio managers.

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Speaker 1: How about so all right, we're more than eighty percent

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Speaker 1: away through the earnings this quarter? Your key takeaways here?

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Speaker 1: Do you feel a little bit better? You feel a

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Speaker 1: little bit more concerned the last time I looked at earnings?

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Speaker 1: What what you know? So one of our one of

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Speaker 1: our thoughts is, you know, when you're trying to time

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Speaker 1: the recession, how do you time it? And the way

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Speaker 1: that I'm trying to work it is looking at the

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Speaker 1: erosion of margins in the economy as a whole, So

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Speaker 1: not just SMP five hundreds. So but if we look

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Speaker 1: at if we look at those earnings numbers, I'm seeing

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Speaker 1: revenue go up and I'm seeing or you know, um

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Speaker 1: earnings go up by less and so that tells me

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Speaker 1: that the margins are compressing a little bit further. So

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Speaker 1: it's consistent with our view that that erosion is continuing Um,

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Speaker 1: and that's you know, you know, absent other factors. It

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Speaker 1: still looks to me like one is when we have

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Speaker 1: to really think about there being a recession in the US.

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Speaker 1: Drew manis thank you so much for that right now

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Speaker 1: on politics and we'll be jumping back and forth on

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Speaker 1: this end of the Tuesday UH debate in South Carolina,

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Speaker 1: Todd Marianna joins us from eur Asia Group. Todd. Every weekend,

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Speaker 1: I go, I have a panic, and I go, I

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Speaker 1: gotta get smarter fast on something. And without question, off

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Speaker 1: of Mr Saunders relative performance in Las Vegas and Nevada. UM,

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Speaker 1: I had to read it on a Latino vote. Latino vote,

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Speaker 1: help me here? How important will Latino vote be? Super Tuesday?

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Speaker 1: Good morning, Tom. Great to be with you as always,

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Speaker 1: And I think we're all of that same camp these days,

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Speaker 1: given uh all that's going on in politics, trying to

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Speaker 1: get smart on things over the weekend. The Latino vote is,

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Speaker 1: you know, it's it's something that's become of increasing importance

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Speaker 1: to US politics generally, Um, but of critical importance to

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Speaker 1: winning the Democratic nomination, and Nevada showed that very clearly.

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Speaker 1: But UM, you know we've known that for several cycles. Now,

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Speaker 1: what I think is different here in Nevada is the

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Speaker 1: fact that a candidate like Sanders could come out with

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Speaker 1: entrance polls, you know, uh, indicating that he had above

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Speaker 1: fifty Latino vote. He struggled with minority votes the last

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Speaker 1: time around. And again, as we said, we've known for

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Speaker 1: several cycles that Latino vote is growing. That's places like

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Speaker 1: you know, South Carolina, Texas obviously, but across the South

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Speaker 1: and even the Midwest. So the fact that a candidate

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Speaker 1: like Sanders could get that kind of draw, I think

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Speaker 1: is a real important lesson of Nevada. The money question

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Speaker 1: this morning, Greg Valier wrote it up. I know you've

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Speaker 1: been looking at it as well, is if Sunder Sanders prevails,

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Speaker 1: is a Democratic House at risk? I think it is

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Speaker 1: at risk. You know what, what exactly that risk is,

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Speaker 1: um kind of remains to be determined. It's still it's

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Speaker 1: still early to say, but I mean, I think the

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Speaker 1: fact that it's at least at risk is what's motivating

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Speaker 1: a lot of Democratic leaders and the elites as a

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Speaker 1: party to have feared of Bernie Sanders candidacy, you know,

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Speaker 1: from from the get go, from t and certainly continuing

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Speaker 1: through this cycle. UM, you know, you you don't look

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Speaker 1: at the national level there, you look on a district

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Speaker 1: by district basis, where you know, Republicans are going to

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Speaker 1: hammer a message, an anti socialist message, and in places like,

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Speaker 1: for example, the Virginia seventh district, which which was flipped

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Speaker 1: very very famously in UM, that message will probably resonate.

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Speaker 1: So it's it's at least at risk. But we don't

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Speaker 1: know is how many new people and disaffected voters Bernie

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Speaker 1: could turn out at the polls. That's that's the real

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Speaker 1: argument behind his candidacy. But the risk is clearly there.

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Speaker 1: So Todd, what's ex what's at stake on the debate

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Speaker 1: tomorrow in South Carolina? Number one? I think that Um,

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Speaker 1: Michael Bloomberg certainly has has you know, some some work

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Speaker 1: to do, I think to uh to get past the

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Speaker 1: you know what what happened last week, and you know

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Speaker 1: many indications that that certainly can happen. We we've seen

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Speaker 1: that before. Um. You know, Joe Biden another he's another

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Speaker 1: I think strong debate performance to uh solidify his lead

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Speaker 1: in South Carolina. Last year, bid Fleet in South Carolina

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Speaker 1: was you know, double digits, getting into the twenties at points,

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Speaker 1: and you know, on average, he's up about three points

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Speaker 1: about over standers now, So that's good news for Biden

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Speaker 1: if you can take home in South Carolina went heading

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Speaker 1: into Super Tuesday. But the fact that it's so close

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Speaker 1: means that um certainly that I think there's more pressure

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Speaker 1: on him in in this debate than before. The third

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Speaker 1: thing I'd say is whether the candidates can really kind

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Speaker 1: of circle the wagons and attack Burnie Sanders if they

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Speaker 1: really don't want him to be the nominee. I think

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Speaker 1: it behooves them to stop fighting among themselves for you

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Speaker 1: to say the moderate vote and uh and and turn

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Speaker 1: on him. But there's there's certainly a sense among campaign

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Speaker 1: strategies that it that it might be too late. Do

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Speaker 1: you mentioned Michael Bloomberg, the founder a majority owner of

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Speaker 1: Bloomberg LP, the owner of this radio station and Bloomberg News,

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Speaker 1: And I am wondering if this is a make it

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Speaker 1: or break it moment for him, given that he was

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Speaker 1: widely panned and his performance at the last debate. I

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Speaker 1: don't think it's naked or break it for him because

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Speaker 1: he is he's self financed number one and all along

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Speaker 1: he's had a Super Tuesday strategy. So the real maker

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Speaker 1: breaks with him, I think comes on Tuesday, where he's

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Speaker 1: already made you very significant in rows across a whole

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Speaker 1: host of states that you know that it's been a

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Speaker 1: little bit surprising, and I think a reflection of the

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Speaker 1: weakness of some other candidates in the race that just

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Speaker 1: be undecided of Democratic voters in general. But it's it's

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Speaker 1: clearly a very important moment for him, I think, to

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Speaker 1: keep that momentum going facing you know, the American public again,

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Speaker 1: of which he had not you know, up until his

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Speaker 1: debate last week. So Todd, you know, if I'm the

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Speaker 1: Democratic National Committee, if I'm the establishment, the Democratic establishment,

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Speaker 1: how am I thinking about Bernie Sanders here to the

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Speaker 1: extent that he is the front runner and his potential

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Speaker 1: in November. I think I think you're very worried, you know,

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Speaker 1: quite frankly, because, uh, the argument for Bernie is that

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Speaker 1: he could be like Trump in and you know, the

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Speaker 1: sort of anti establishment vote could confound expectations and you know,

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Speaker 1: provide a lot of surprise, uh in this in this race.

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Speaker 1: But the reason you're worried is that Bernie is so

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Speaker 1: much more extreme, you know, across the board, uh than

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Speaker 1: than Trump as ever was. Trump has you know, many

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Speaker 1: positions which are very orthodox Republican views on you know,

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Speaker 1: economic policy judges, things like that. Bernie, there's not an

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Speaker 1: issue out there on which he's not extreme. So they're

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Speaker 1: they're very nervous because again, like I was saying, that

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Speaker 1: argument for his candidacy was completely contested. I mean, this

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Speaker 1: came up over cocktails last night and and uh, todmer

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Speaker 1: Marianna with us your Aisier group right now. I mean,

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Speaker 1: who of the candidates would you see dovetail with Senator

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Speaker 1: Sanders if he tries to put together a ticket. I mean,

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Speaker 1: I mean it's ridiculous to talk about a vice presidential

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Speaker 1: prospect right now. I get that. But are all of

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Speaker 1: these different candidates so removed from his democratic socialism that

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Speaker 1: they would be uncomfortable even standing with him? I think

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Speaker 1: most of them would be. And so you know, again

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Speaker 1: you could you could see something very similar to to

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Speaker 1: Trump sixteen, where Bernie would be reaching beyond you know,

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Speaker 1: the the usual back bench, the usual names that are

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Speaker 1: that are floated here. Um. I mean, you know, people

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Speaker 1: talk about a potential Lawrence Sanders tickets. I I myself think, uh,

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Speaker 1: you know, standers would probably look for, you know, a

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Speaker 1: little bit more diversity in in the ticket, but you know,

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Speaker 1: in terms of policy positions, the establishment will pressure him

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Speaker 1: to moderate. I think Bernie could credibly argue that he

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Speaker 1: hasn't gotten this far by moderating. Is there any is

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Speaker 1: there any history of Senator Sanders quote unquote moderating If

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Speaker 1: if there is, it's not significant, and I'm and I'm

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Speaker 1: not aware of it. You know, his his views are

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Speaker 1: are very similar to you know, what they what they

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Speaker 1: were in the nineteen eighties. When you hear sometimes is

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Speaker 1: that his support for certain groups, especially in foreign policy,

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Speaker 1: has you know, has moderated versus some of the people

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Speaker 1: he was supporting in the nineteen eighties, which will hear

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Speaker 1: plenty about if he's the nominee against Trump, Latin dictatorships

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Speaker 1: and all that kind of Well, there's a question here

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Speaker 1: to about momentum and how much moment tim the Democrats

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Speaker 1: have or don't have due to how big the field is.

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Speaker 1: Who are the next candidates that you expect to drop out?

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Speaker 1: I think the spotlight is really on Elizabeth Warren and

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Speaker 1: Amy Clobature. For me, I think Pete boota judge probably

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Speaker 1: has enough money to stay in through Super Tuesday. Elizabeth

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Speaker 1: Warren probably does as well. But you know, unlike boota

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Speaker 1: judge who at least had good results in Ireland at Hampshire,

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Speaker 1: you know, Warren has been you know, sort of relegated

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Speaker 1: in the ranking so far. I think that's why you

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Speaker 1: saw her pivot back to sort of protecting the progressive

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Speaker 1: agenda in the debate rather than necessarily you know, selling

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Speaker 1: her own candidacy. There's not really a state on Super

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Speaker 1: Tuesday in which she u is very likely to win.

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Speaker 1: She's competitive in her homestead of Massachusetts. Clobature is also

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Speaker 1: competitive in Minnesota, which both Super Tuesday. Um, but both

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Speaker 1: of them. I think the odds are against their Their

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Speaker 1: candidacy is going a lot further. The trouble there is that, um,

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Speaker 1: you know, that's not going to provide much of a

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Speaker 1: tailwind for the other candidates and the Ray simply because

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Speaker 1: they're not um you know, uh, grabbing a whole lot

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Speaker 1: of boat share at the moment. Anyway, let's leave it there.

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Speaker 1: Thank you so much, Todd, Marianna, thank you so much

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Speaker 1: for the briefing. Here is all everybody tries to adjust

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Speaker 1: digest Rather what we saw Saturday and onto that CBS

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Speaker 1: debate Tuesday in Charleston, South Carolina. Our focus this morning,

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Speaker 1: as in the last twelve hours, has been on the

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Speaker 1: spread of the virus and the let's be clear here,

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Speaker 1: there's been no annwn statement of epidemic to pandemic, and

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Speaker 1: yet that is a source of conversation this morning. We

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Speaker 1: need a briefing now on China and get that in

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Speaker 1: Beijing from our Selena waiting Selena, Selena very simply here,

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Speaker 1: is there a better outlook on a Monday into your

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Speaker 1: Tuesday in China? Well, Tom, the only outlook that seems

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Speaker 1: to be somewhat improving, it's at the rate of use.

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Speaker 1: Who they taught in China do seem to be stabilizing that.

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Speaker 1: As you said, the conversation is now growing around whether

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Speaker 1: or not the World Health Organization escalates this from an

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Speaker 1: international public health emergency to a global pandemic, which essentially

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Speaker 1: means us a sustained during of cases outside of that

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Speaker 1: outbreak area. And because there's seeing an increased cases outside

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Speaker 1: of China and Italy, new cases emerging in the Middle East,

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Speaker 1: a very strong ramp up of stasies in South Korea,

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Speaker 1: that does beg the question of just how much faster

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Speaker 1: this is when to continue to accelerate outside of the

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Speaker 1: center of the outbreak, Selena, can you put that into

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Speaker 1: perspective when we hear about a reopening of some of

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Speaker 1: the previously quarantined areas in China, is this because basically

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Speaker 1: Beijing is admitting conceding that containment has failed, so we

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Speaker 1: aren't seeing the reopening of the lockdown area. There was

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Speaker 1: a bit of confusion, so essentially, at first China had

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Speaker 1: released a statement allowing some travel for non residents out

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Speaker 1: side of the hunt, but then that was very shortly reversed.

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Speaker 1: The top officials said that that was not authorized, that

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Speaker 1: was a mistake. So this has brought a lot of

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Speaker 1: continued confusion after Cuba Province has changed their county methodology

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Speaker 1: multiple times over the past month as well. But to

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Speaker 1: put things into perspective, there are now more than seventy

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Speaker 1: seven thousand cases in China. This is still the vast

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Speaker 1: majority of total cases around the world. You do still

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Speaker 1: have sweeping craft downs in terms of travel restrictions and

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Speaker 1: quarantines across the country. You have seen some provinces sees

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Speaker 1: that slightly, but overall people's travel and movement are still

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Speaker 1: respected across the country. So Selena, give us a sense

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Speaker 1: of one of the areas that we've been seeing some

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Speaker 1: reporting recently, is this concept getting back to work in China.

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Speaker 1: What is the expectation of the government of trying to

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Speaker 1: ramp up production, get people back into the factories back

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Speaker 1: to work. Where are we in that regard, Yeah, exactly,

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Speaker 1: that's a really the problem right now is trying to

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Speaker 1: get those migrant workers that are stuck in their hometowns

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Speaker 1: to get back to their place of work. For instance,

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Speaker 1: in Beijing, they had earlier instituted this looking day quarantine

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Speaker 1: for people who were coming back for places outside of Beijing,

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Speaker 1: so a lot of people have a trouble getting out

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Speaker 1: of their city, but be also are buried that once

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Speaker 1: when they get to where they need to be that

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Speaker 1: they're going to have to be self quarantined again. So

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Speaker 1: that's been a really big problem because according to Boomberg Economics,

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Speaker 1: China's econmuny is only running about half of its capacity

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Speaker 1: over the past week, and a lot of these companies

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Speaker 1: as well are having trouble paying their employees. Access. Survey

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Speaker 1: of small and medium sized companies in China said that

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Speaker 1: only a third of them had enough cash to cover

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Speaker 1: expenses for a month. What do you see on the streets?

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Speaker 1: I mean, Selena, through the weekend and into your all

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Speaker 1: day Monday. Now it's there. Let's call it seven pm

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Speaker 1: almost eight p m Monday evening. What did you actually

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Speaker 1: observe in the streets this weekend. Well, it's really interesting

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Speaker 1: because across Beijing, different communities, how different levels of activities.

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Speaker 1: So around where I live at a pretty commercial disference,

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Speaker 1: and it's still very quiet. A lot of shops and

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Speaker 1: restaurants are still closed. Everybody is required to wear masks

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Speaker 1: out side, a lot of big public gatherings are are

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Speaker 1: not allowed to occur. And if you lost when I

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Speaker 1: just went over the weekend, when East do a mall

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Speaker 1: and there are some more residential areas, you actually started

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Speaker 1: to see more movement on the streets. And actually some

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Speaker 1: of the public parks not quite crowded. I went to

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Speaker 1: Reton Park. The elderly folk still exercising and walking out

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Speaker 1: and about with the government does not encourage that, but

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Speaker 1: people are really getting stick inside of being stuck inside

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Speaker 1: all day. Selena, thank you so much. Loved that anecdotal

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Speaker 1: work from Beijing as well. Selena Wayne reporting from Beijing.

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Speaker 1: Let's dive into a global Wall Street conversation, and this

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Speaker 1: really works to Lesa's theme this morning, which is Catharsis.

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Speaker 1: Stewart Kaiser writes exceptionally detailed notes for Ubs on the

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Speaker 1: moments of the mark. This is the mathematics. You know,

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Speaker 1: the bell curve in high school folks. And then there's

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Speaker 1: a squishiness to the bell curve, which is variants and

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Speaker 1: a thing called skewness or skewness if you're British. And

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Speaker 1: then this thing called crotosis, which is not the mold

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Speaker 1: in your feet. Right now, do you have any idea,

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Speaker 1: Mr Kaiser, where the cross moments are right now? Well,

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Speaker 1: I mean obviously this uh the move this morning. You're

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Speaker 1: gonna change things a little bit um on the pricing

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Speaker 1: if you look at it coming into this week, you know,

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Speaker 1: the vix curved flattened out, which is sort of what

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Speaker 1: happens when the market is a little bit confused about

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Speaker 1: what's going on. Um, what we're gonna see today, which

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Speaker 1: we are seeing, is the curve getting very steeply inverted

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Speaker 1: and effectively, if you think of what the VIX is,

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Speaker 1: the vix is the twenty five delta put implied volatility loosely,

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Speaker 1: which is telling you it's the price for protection to

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Speaker 1: head your portfolio, and that's back above twenty. So what

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Speaker 1: you're seeing is a very big bid for skew and

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Speaker 1: that's happening in the US, that tends to happen in

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Speaker 1: the SMP. This is great. I mean, this suppis will

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Speaker 1: be jargonted a hockey games alta new Jerseys out in

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Speaker 1: the Garden State Parkway and drove off the road three

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Speaker 1: times on let's unpass what you said in English. The

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Speaker 1: bottom line is, guys like you look at the dynamics

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Speaker 1: of the volatility of the SMP five hundred as a

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Speaker 1: guestimate of confidence in the market. Did I get that right? Yeah?

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Speaker 1: So the victure is gonna tell you two things. Just

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Speaker 1: gonna tell you how concerned people are, I how much

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Speaker 1: they're willing to pay for insurance. And then because there's

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Speaker 1: a term structure, they'll tell you when they want that insurance.

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Speaker 1: And what you see when the market is really really

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Speaker 1: stressed like it is today, is they want insurance really badly,

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Speaker 1: and they wanted a meetia. I'm like, come on, this

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Speaker 1: is an August of two thousand seven or August. I mean,

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Speaker 1: how stressed is stressed today? Sweeney's you know, got you

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Speaker 1: get your brokers on the phone here, you're not ready

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Speaker 1: to do a toime keen you go all to cash? Right?

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Speaker 1: How stressed are we? Look? I think there's there's three

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Speaker 1: aspects to this. The first is the psychology part, which

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Speaker 1: which Amy touched on, which is when we got the

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Speaker 1: initial sell off on China, it was relative. It's at

428
00:22:54,920 --> 00:22:58,159
Speaker 1: least Amy Amy's in last week It's ok, you can

429
00:22:58,200 --> 00:23:02,240
Speaker 1: call me Amy, it's two sell of it worked, I apologize,

430
00:23:05,520 --> 00:23:11,359
Speaker 1: ke So what happened in late January was the market

431
00:23:11,359 --> 00:23:14,760
Speaker 1: didn't sell off very much, and that's suggested by the mentality. Um.

432
00:23:14,800 --> 00:23:16,600
Speaker 1: We think that also might have been impacted by the

433
00:23:16,600 --> 00:23:19,200
Speaker 1: fact that people would already hedge their portfolios against election

434
00:23:19,320 --> 00:23:22,119
Speaker 1: risk because you had all that coming in early February.

435
00:23:22,560 --> 00:23:25,800
Speaker 1: The second thing is what's going on with growth? And

436
00:23:25,960 --> 00:23:27,840
Speaker 1: last week what we saw in Europe was the p

437
00:23:28,000 --> 00:23:30,240
Speaker 1: m I S printed strong, but within the p M

438
00:23:30,280 --> 00:23:33,439
Speaker 1: I S was a very long increase in delivery times.

439
00:23:33,680 --> 00:23:36,000
Speaker 1: Typically that's right, is positive for growth. We actually read

440
00:23:36,040 --> 00:23:38,080
Speaker 1: that as negative for growth because what that means today

441
00:23:38,160 --> 00:23:40,960
Speaker 1: is that the supply change, you're getting massively disrupted. The

442
00:23:41,000 --> 00:23:43,000
Speaker 1: third part is you know what's going on from a

443
00:23:43,000 --> 00:23:46,040
Speaker 1: global perspective, and you know this is now affected the

444
00:23:46,040 --> 00:23:48,480
Speaker 1: West and it's in Europe, so that's gonna you know,

445
00:23:48,600 --> 00:23:50,600
Speaker 1: hit a third aspect of us. You're seeing three sort

446
00:23:50,600 --> 00:23:52,359
Speaker 1: of impacts I think on the market. So from a

447
00:23:52,400 --> 00:23:56,440
Speaker 1: technical perspective, there's a question do you sell your holdings

448
00:23:56,520 --> 00:23:59,399
Speaker 1: if this is going to be temporary. How much do

449
00:23:59,480 --> 00:24:01,600
Speaker 1: you look at the VIX curve? How much do you

450
00:24:01,640 --> 00:24:04,160
Speaker 1: look at what people are doing there as a way

451
00:24:04,280 --> 00:24:07,920
Speaker 1: of hedging without selling, sort of the knee jerk response

452
00:24:08,160 --> 00:24:11,000
Speaker 1: that could give some sense of just how much fear

453
00:24:11,280 --> 00:24:13,320
Speaker 1: could end up bleeding in to the market and causing

454
00:24:13,320 --> 00:24:16,760
Speaker 1: forced sales. Yeah, look, I mean I think the mentality

455
00:24:16,840 --> 00:24:19,919
Speaker 1: market is probably still too by the dip um. But

456
00:24:20,240 --> 00:24:22,600
Speaker 1: when you see these types of moves in the market,

457
00:24:22,640 --> 00:24:24,280
Speaker 1: I mean, the SMP is down almost two and a

458
00:24:24,320 --> 00:24:26,800
Speaker 1: half percent overnight. I think the worst selloff we had

459
00:24:26,840 --> 00:24:28,840
Speaker 1: in January was probably one to one and a half percent,

460
00:24:28,880 --> 00:24:30,480
Speaker 1: So this is a different degree of it. So I

461
00:24:30,520 --> 00:24:32,480
Speaker 1: think generally speaking, what you're probably going to see is

462
00:24:32,520 --> 00:24:36,119
Speaker 1: people keep their core portfolio intact and hedge it unless

463
00:24:36,119 --> 00:24:39,160
Speaker 1: and until and so then. In other words, how much

464
00:24:39,480 --> 00:24:41,560
Speaker 1: do you have to see the vics spike up from

465
00:24:41,600 --> 00:24:43,600
Speaker 1: here right now? At one point it was the most

466
00:24:43,640 --> 00:24:46,119
Speaker 1: since two thousand and eighteen. How much more do we

467
00:24:46,200 --> 00:24:48,560
Speaker 1: have to see before we really are starting to feel

468
00:24:48,560 --> 00:24:52,679
Speaker 1: the capitulation? The catharsis at least expressed in derivatives. I

469
00:24:52,680 --> 00:24:54,560
Speaker 1: think from my perspective, you know, come and talk to

470
00:24:54,560 --> 00:24:57,480
Speaker 1: me when it's on a handle um and I think

471
00:24:57,560 --> 00:24:59,880
Speaker 1: that that type of level suggests, like in the scrim

472
00:25:00,040 --> 00:25:02,320
Speaker 1: and in discriminate hedge, what's the bet in the market

473
00:25:02,400 --> 00:25:04,480
Speaker 1: right now? I mean, Paul helped me here. The the

474
00:25:04,760 --> 00:25:08,960
Speaker 1: idea that we've seen is institutional money has been comfortable

475
00:25:09,000 --> 00:25:12,439
Speaker 1: in bonds, in cash and has been reticent to pile

476
00:25:12,520 --> 00:25:15,200
Speaker 1: into equities. Is at a generally correct statement? I think?

477
00:25:15,200 --> 00:25:17,880
Speaker 1: So I'm looking at the tenure on one thirty night time.

478
00:25:18,000 --> 00:25:20,280
Speaker 1: What do you do? I mean, what's the what's the

479
00:25:20,359 --> 00:25:23,919
Speaker 1: bet on the street right now? Around the derivative strategies

480
00:25:23,920 --> 00:25:26,240
Speaker 1: you live in every day? I mean, what are people

481
00:25:26,280 --> 00:25:31,240
Speaker 1: putting on? Look at? I think what you've actually seen?

482
00:25:31,520 --> 00:25:34,879
Speaker 1: You think more Grave Simmons is taking over products that

483
00:25:36,200 --> 00:25:38,360
Speaker 1: I would say what I think you've seen more generally

484
00:25:38,600 --> 00:25:41,720
Speaker 1: is two things. One some hedging, usually or mostly around

485
00:25:41,760 --> 00:25:44,840
Speaker 1: election risks, and the second is people frankly buying upside

486
00:25:44,880 --> 00:25:47,720
Speaker 1: in more cyclical parts of the market on the assumption

487
00:25:47,760 --> 00:25:49,520
Speaker 1: that US growth is going to bottom at the end

488
00:25:49,560 --> 00:25:51,399
Speaker 1: of the first quarter of the early second quarter, and

489
00:25:51,440 --> 00:25:53,400
Speaker 1: this China thing is gonna be temporary. And I want

490
00:25:53,400 --> 00:25:55,479
Speaker 1: to explosure. Let's go a Greek letter right now. How

491
00:25:55,520 --> 00:25:58,560
Speaker 1: are you managing Gamma right now? The second derivative the

492
00:25:58,640 --> 00:26:02,160
Speaker 1: accelerations in the market. Are you thrilled to buy Gamma

493
00:26:02,240 --> 00:26:04,560
Speaker 1: and believe we're going to accelerate or you selling it

494
00:26:04,880 --> 00:26:08,200
Speaker 1: bringing in premium because you think the acceleration call is wrong.

495
00:26:08,680 --> 00:26:10,840
Speaker 1: I think it's a very hard thing to estimate what

496
00:26:10,880 --> 00:26:14,960
Speaker 1: the neck Gamma position, but we do that Gama. I

497
00:26:15,000 --> 00:26:17,960
Speaker 1: would say that generally the street has probably been caught

498
00:26:18,280 --> 00:26:23,040
Speaker 1: short Gamma for the most excuse me, um, excuse me.

499
00:26:23,080 --> 00:26:25,920
Speaker 1: The market is generally been caught long Gamma. The street has.

500
00:26:26,280 --> 00:26:29,280
Speaker 1: And the reason what happens when that happened is when

501
00:26:29,320 --> 00:26:32,080
Speaker 1: the market moves. You have selling. When market was up,

502
00:26:32,119 --> 00:26:33,760
Speaker 1: you have selling. Me the market moves down to your buying,

503
00:26:33,760 --> 00:26:35,159
Speaker 1: and that's one of the reasons that market has been

504
00:26:35,200 --> 00:26:37,639
Speaker 1: so well behaved recently because the street just kind of

505
00:26:37,640 --> 00:26:41,320
Speaker 1: been in that position and will that change today? It could?

506
00:26:41,400 --> 00:26:43,800
Speaker 1: You know, we're busting chops here, folks, but Stewart kais

507
00:26:43,840 --> 00:26:46,639
Speaker 1: just killing it here on how adults on Wall st

508
00:26:47,280 --> 00:26:51,440
Speaker 1: long gamma they did flock of seagulls like, alright, alphabeta

509
00:26:51,440 --> 00:26:53,920
Speaker 1: gamma delta. What am I buying here? To say? What

510
00:26:53,960 --> 00:26:56,080
Speaker 1: do you think? What are you seeing on your desk?

511
00:26:56,520 --> 00:26:58,800
Speaker 1: You know, you know, maybe over the last several days,

512
00:26:58,840 --> 00:27:00,800
Speaker 1: are people kind of going out on the risk curve

513
00:27:00,880 --> 00:27:02,439
Speaker 1: or they saying I'm pulling in my horns. I'm kind

514
00:27:02,440 --> 00:27:04,840
Speaker 1: of going conservatives. From from an equity perspective, I think

515
00:27:04,840 --> 00:27:07,160
Speaker 1: people were moving up the risk curve until the middle

516
00:27:07,200 --> 00:27:10,800
Speaker 1: of last week, and the the Apple News last week

517
00:27:11,200 --> 00:27:13,560
Speaker 1: caught people, I think a little bit wrong footed. And

518
00:27:13,600 --> 00:27:15,720
Speaker 1: the reason I say that is because most people expected

519
00:27:15,760 --> 00:27:18,240
Speaker 1: this to be a very sharp V shaped recovery and

520
00:27:18,280 --> 00:27:21,320
Speaker 1: the Apple you know, the speed with which they were

521
00:27:21,359 --> 00:27:23,200
Speaker 1: willing to cut or you know, say we're gonna miss

522
00:27:23,200 --> 00:27:25,280
Speaker 1: our guidance basically in less than two weeks. I think

523
00:27:25,280 --> 00:27:27,199
Speaker 1: people say, wait a second, is this going to be

524
00:27:27,200 --> 00:27:29,959
Speaker 1: a deeper pullback or perhaps some more pronounced pullback than

525
00:27:30,000 --> 00:27:32,120
Speaker 1: I expected. If a company of that size is willing

526
00:27:32,119 --> 00:27:34,119
Speaker 1: to move their guidance that quickly, so I think that

527
00:27:34,160 --> 00:27:36,240
Speaker 1: was kind of shot across the bow. And now what

528
00:27:36,280 --> 00:27:38,240
Speaker 1: you see in the last couple of days is obviously

529
00:27:38,320 --> 00:27:41,240
Speaker 1: a different but an acceleration or an expansion of that.

530
00:27:41,320 --> 00:27:43,640
Speaker 1: This has been a wonderful Stewart Kaiser, thank you so much.

531
00:27:43,640 --> 00:27:47,520
Speaker 1: With UBS really adult RelA, we again we protect the

532
00:27:47,560 --> 00:27:49,800
Speaker 1: copyright of all of our guests. If you want this

533
00:27:49,920 --> 00:27:54,920
Speaker 1: exquisite mathematics from UBS, get it from UBS. Mr Kaiser,

534
00:27:55,000 --> 00:28:03,080
Speaker 1: how to derivatives there with right now we start strong

535
00:28:03,480 --> 00:28:07,560
Speaker 1: with Christina Hooper. She is with strategy at Investco. Christine

536
00:28:07,600 --> 00:28:10,960
Speaker 1: and Arianna Cuta Dakota published in Bloomer Opinion in the

537
00:28:11,040 --> 00:28:14,760
Speaker 1: last hour. Very important statement. This from the former head

538
00:28:14,800 --> 00:28:17,159
Speaker 1: of the Minneapolis Fed and now at Rochester, one of

539
00:28:17,160 --> 00:28:22,080
Speaker 1: our great mathematicians, great students of the dynamics of the economy.

540
00:28:22,320 --> 00:28:24,680
Speaker 1: He says, the Fed can't wait, they should cut rates now.

541
00:28:24,720 --> 00:28:28,720
Speaker 1: He even says, or fifty basis points, what's the urgency

542
00:28:28,760 --> 00:28:33,280
Speaker 1: of the Fed to accommodate this virus? I'm not sure

543
00:28:33,320 --> 00:28:35,480
Speaker 1: there should be an urgency of the FED. I think

544
00:28:35,520 --> 00:28:38,480
Speaker 1: a lot of it has to do with business confidence,

545
00:28:38,800 --> 00:28:41,440
Speaker 1: and if we do see an erosion there, that's when

546
00:28:41,440 --> 00:28:44,320
Speaker 1: the FED does need to step in, at least to

547
00:28:44,800 --> 00:28:48,800
Speaker 1: make more statements that suggests that it stands ready to

548
00:28:48,920 --> 00:28:52,840
Speaker 1: provide an insurance cut for the purposes of fending off

549
00:28:52,960 --> 00:28:56,560
Speaker 1: the negative impact of the coronavirus. I don't. I don't

550
00:28:56,560 --> 00:28:58,840
Speaker 1: think there's a sense of urgency yet, although there does

551
00:28:58,880 --> 00:29:01,080
Speaker 1: seem to be a feeling of I know, earlier today

552
00:29:01,120 --> 00:29:03,400
Speaker 1: you talked about how it felt like a controlled sell off.

553
00:29:03,440 --> 00:29:05,720
Speaker 1: I think that changed a bit out of control. I

554
00:29:05,760 --> 00:29:08,000
Speaker 1: think that's not a bit out of control sincent exactly.

555
00:29:08,200 --> 00:29:10,440
Speaker 1: And so I think that the said has to be

556
00:29:10,520 --> 00:29:14,320
Speaker 1: measured and thoughtful. It can't be completely reactionary, but is

557
00:29:14,440 --> 00:29:18,800
Speaker 1: clearly um suggested that it's willing to provide insurance cuts

558
00:29:18,840 --> 00:29:20,800
Speaker 1: just by its behavior last year and the way we

559
00:29:20,840 --> 00:29:23,000
Speaker 1: triangulate that. Folks on the Bloomberg and I've got the

560
00:29:23,040 --> 00:29:25,560
Speaker 1: Bloomberg launch pad in front of me. It's got probably

561
00:29:25,600 --> 00:29:28,640
Speaker 1: a hundred and fifty data points. As you triangulate, Paul,

562
00:29:29,320 --> 00:29:34,080
Speaker 1: certain trends away from the blunt instrument of the vix

563
00:29:34,120 --> 00:29:36,200
Speaker 1: at twenty three point two one to tape a little

564
00:29:36,200 --> 00:29:39,880
Speaker 1: better in the last fifteen minutes. I triangulate by looking

565
00:29:39,920 --> 00:29:43,480
Speaker 1: at stronger yet and critically Paul to Christina's perfect point,

566
00:29:43,920 --> 00:29:45,920
Speaker 1: how we've given away to a little bit of sweat

567
00:29:46,320 --> 00:29:50,040
Speaker 1: Nimex crew. The West Texas Intermediate was a solid fifty one.

568
00:29:50,400 --> 00:29:54,240
Speaker 1: It's now fifty point nine five, down two dollars three cents,

569
00:29:54,280 --> 00:29:56,520
Speaker 1: So that's oil giving way as well. Yeah, that's down

570
00:29:56,520 --> 00:30:00,120
Speaker 1: four and a half percent, so clearly reflecting potentially our

571
00:30:00,160 --> 00:30:02,240
Speaker 1: global growth. Christina. So when you look at the price

572
00:30:02,320 --> 00:30:06,200
Speaker 1: performance this morning, is this healthy? Is this a reasonable

573
00:30:06,440 --> 00:30:09,280
Speaker 1: reaction to what is a dynamic story as it relates

574
00:30:09,320 --> 00:30:13,920
Speaker 1: to the coronavirus. Well, I think it may not be reasonable,

575
00:30:14,080 --> 00:30:17,640
Speaker 1: but it is perfectly understandable given that markets in the

576
00:30:17,760 --> 00:30:21,040
Speaker 1: short term are voting machines and only in the longer

577
00:30:21,160 --> 00:30:24,160
Speaker 1: term are weighing machines. So I think it's it's perfectly

578
00:30:24,240 --> 00:30:27,880
Speaker 1: understandable and not surprising. What I'm a bit more surprised

579
00:30:27,880 --> 00:30:31,720
Speaker 1: about is what we've seen with the plummet in UH

580
00:30:31,920 --> 00:30:35,719
Speaker 1: yields on treasuries UH to see where the tenure is,

581
00:30:35,800 --> 00:30:39,160
Speaker 1: where the thirty year is is a bit surprising, especially

582
00:30:39,160 --> 00:30:42,720
Speaker 1: since I've always believed that the Tenure U S Treasury

583
00:30:42,800 --> 00:30:46,280
Speaker 1: yield is a better fear gage than the vix Um.

584
00:30:46,280 --> 00:30:48,000
Speaker 1: But I will tell you, I'll give you the caveat

585
00:30:48,080 --> 00:30:51,000
Speaker 1: that the Tenure does not have medical training, and I

586
00:30:51,040 --> 00:30:53,400
Speaker 1: think that's an important point to make. We'll believe their

587
00:30:53,480 --> 00:30:57,400
Speaker 1: Christine over way too short today, but very very valuable

588
00:30:57,480 --> 00:31:00,360
Speaker 1: on of course, so she is with invest what we're

589
00:31:00,360 --> 00:31:02,600
Speaker 1: gonna do as we drive forward through this half, however,

590
00:31:02,760 --> 00:31:05,680
Speaker 1: special coverage with do we get the negative one thousand?

591
00:31:05,760 --> 00:31:08,760
Speaker 1: I don't think. We don't think first we bounced up

592
00:31:08,760 --> 00:31:11,520
Speaker 1: a hundred points negative eight fifty nine now on the

593
00:31:11,600 --> 00:31:14,280
Speaker 1: Dow that we're gonna bring in a select number of guests,

594
00:31:14,320 --> 00:31:16,520
Speaker 1: all of them with different views. Cameron christ joins us

595
00:31:16,520 --> 00:31:19,080
Speaker 1: now with Bloomberg, and of course he has a wonderful

596
00:31:19,080 --> 00:31:22,640
Speaker 1: ability to synthesize correlation into all this. Cameron, what do

597
00:31:22,680 --> 00:31:26,200
Speaker 1: you see within the correlations of the market. Well, I

598
00:31:26,240 --> 00:31:30,280
Speaker 1: mean right now, everything is uh uh, it is pricing

599
00:31:30,320 --> 00:31:33,640
Speaker 1: fair right um for the equi market. That's a relatively

600
00:31:33,680 --> 00:31:38,520
Speaker 1: recent phenomenon. Obviously we had last month's episode, but it

601
00:31:38,560 --> 00:31:40,440
Speaker 1: was only a few days ago. This time last week,

602
00:31:40,480 --> 00:31:45,240
Speaker 1: we were pretty much the dingy um treasury or government bonds.

603
00:31:45,600 --> 00:31:49,520
Speaker 1: I've been fairly consistent since the whole virus thing um

604
00:31:49,720 --> 00:31:53,000
Speaker 1: broke UH pricing risk aversion. I think it's the previous

605
00:31:53,000 --> 00:31:56,680
Speaker 1: gustum guest mentioned. And the interesting nexus in between the

606
00:31:56,680 --> 00:31:59,880
Speaker 1: two is credit um, where I think you can are

607
00:32:00,120 --> 00:32:03,680
Speaker 1: you that high yield at the moment is trading like

608
00:32:03,720 --> 00:32:08,760
Speaker 1: a government bond um, and that is pretty unsustainable if

609
00:32:08,800 --> 00:32:14,200
Speaker 1: there is a legitimate economic hit um that spreads from

610
00:32:14,240 --> 00:32:16,440
Speaker 1: the from from the virus. That looks like a particular

611
00:32:16,480 --> 00:32:20,560
Speaker 1: point of vulnerability to name, How does factor investing play

612
00:32:20,600 --> 00:32:22,520
Speaker 1: into this? Paul just mentioned. You know, it can be

613
00:32:22,520 --> 00:32:24,760
Speaker 1: the virus, or it can be other things as well.

614
00:32:25,120 --> 00:32:29,280
Speaker 1: When you look at the vogue of momentum or value

615
00:32:29,720 --> 00:32:33,560
Speaker 1: or style investment and all the other almost marketing ideas

616
00:32:33,560 --> 00:32:37,840
Speaker 1: wrapped around a legitimate finance theory called factors, how do

617
00:32:38,040 --> 00:32:40,760
Speaker 1: factors play in when you see a four or five

618
00:32:41,280 --> 00:32:45,080
Speaker 1: drop from the top and intiquities, Well, I think what's

619
00:32:45,080 --> 00:32:49,120
Speaker 1: happening is that you've got an increasing number investors piling

620
00:32:49,160 --> 00:32:54,240
Speaker 1: into an increasingly narrow range of night um, whether it's

621
00:32:54,280 --> 00:32:59,760
Speaker 1: hedge funds or retail kind of everybody has decided that

622
00:32:59,800 --> 00:33:03,080
Speaker 1: they cap tech um is where to be. And it

623
00:33:03,120 --> 00:33:05,400
Speaker 1: takes a lot of the boxes that you see in

624
00:33:05,520 --> 00:33:08,720
Speaker 1: terms of these factors, certainly in terms of momentum UH,

625
00:33:08,800 --> 00:33:12,959
Speaker 1: in terms of growth, which as we know, has trounced value,

626
00:33:13,200 --> 00:33:18,840
Speaker 1: and insofar as the human animal is ultimately a momentum

627
00:33:18,880 --> 00:33:23,360
Speaker 1: based animal, deducing that that which happened yesterday and that

628
00:33:23,440 --> 00:33:27,880
Speaker 1: which happens today is likely to happen tomorrow. UM, that

629
00:33:28,000 --> 00:33:32,920
Speaker 1: we've got everyone kind of long these these relatively narrow

630
00:33:33,000 --> 00:33:37,240
Speaker 1: basket of names. The risk, obviously is if it goes wrong, UM,

631
00:33:37,480 --> 00:33:40,720
Speaker 1: that the exit door might not be sufficiently large to

632
00:33:40,760 --> 00:33:43,480
Speaker 1: accommodate everyone who wants to get out at the same time.

633
00:33:43,520 --> 00:33:46,960
Speaker 1: And Um. The upshot, I think is that liquidity is

634
00:33:47,000 --> 00:33:48,400
Speaker 1: going to be is going to is going to be

635
00:33:48,440 --> 00:33:52,959
Speaker 1: at a premium, and the volatility of volatility UH is

636
00:33:53,040 --> 00:33:56,120
Speaker 1: going to remain elevant. It's very important, folks, that phrase

637
00:33:56,160 --> 00:34:00,320
Speaker 1: of volatility of volatility is Mr christ gets a little

638
00:34:00,520 --> 00:34:04,160
Speaker 1: Matthew Paul, let me frame uh here where we are

639
00:34:04,160 --> 00:34:07,880
Speaker 1: on the opening. We're down five point four percent from

640
00:34:07,880 --> 00:34:11,160
Speaker 1: the recent highs of middle February. I think that will

641
00:34:11,200 --> 00:34:14,640
Speaker 1: be called the Valentine Day high and after that the massacre. Uh,

642
00:34:14,719 --> 00:34:18,719
Speaker 1: and a correction on the Dow is if I can

643
00:34:18,719 --> 00:34:23,279
Speaker 1: get the fame cursorout, twenty six thousand, six hundred would

644
00:34:23,280 --> 00:34:27,560
Speaker 1: be a traditional correction, right, we're points above that down

645
00:34:27,640 --> 00:34:31,279
Speaker 1: known eight d one point. Lukawa just darkened the door,

646
00:34:31,320 --> 00:34:34,439
Speaker 1: as you like to say, Tom Lukawa, Bloomberg News cross

647
00:34:34,440 --> 00:34:37,719
Speaker 1: asset reporter joining us with the camera crisis as well.

648
00:34:37,800 --> 00:34:41,040
Speaker 1: So Luke kind of a rocky opening to the market,

649
00:34:41,040 --> 00:34:43,080
Speaker 1: a little bit of a new view, it seems like

650
00:34:43,080 --> 00:34:47,040
Speaker 1: from financial markets on the potential risk of this Corona crisis.

651
00:34:47,040 --> 00:34:48,920
Speaker 1: What are your early thoughts here as we're you know,

652
00:34:48,920 --> 00:34:52,040
Speaker 1: about eight minutes into the opening of the cash equities markets. Oh, many,

653
00:34:52,160 --> 00:34:55,640
Speaker 1: many assorted thoughts. So let's start with Mark Dow of

654
00:34:56,120 --> 00:34:59,640
Speaker 1: Dow Global Advisors is frequent market commentator, former I M

655
00:34:59,680 --> 00:35:02,000
Speaker 1: F A. Anymous. He's pointed out a lot of the

656
00:35:02,000 --> 00:35:05,800
Speaker 1: times that markets have this tendency to have belated overreaction.

657
00:35:05,920 --> 00:35:08,880
Speaker 1: So we all know what the event is. Not many

658
00:35:08,920 --> 00:35:10,960
Speaker 1: facts about the event of change. There's a lot of

659
00:35:10,960 --> 00:35:13,760
Speaker 1: the knowns, but then we just freak out later anyways,

660
00:35:13,880 --> 00:35:16,560
Speaker 1: rather than when we first hear about it. This strikes

661
00:35:16,560 --> 00:35:20,120
Speaker 1: me as quite memorable compared to the Chinese evaluation that

662
00:35:20,160 --> 00:35:23,120
Speaker 1: did not happen at the end of August. That happened

663
00:35:23,120 --> 00:35:25,840
Speaker 1: with August twelve, and yet it took, you know, a

664
00:35:25,840 --> 00:35:28,800
Speaker 1: couple of weeks later before we open limit down. Second

665
00:35:28,800 --> 00:35:31,960
Speaker 1: of which which ties into this the strictures of the

666
00:35:32,040 --> 00:35:36,319
Speaker 1: options market and how that leads to realize volatility. Last

667
00:35:36,320 --> 00:35:39,160
Speaker 1: Friday was options expiry. When you have all of that

668
00:35:39,480 --> 00:35:42,880
Speaker 1: open interest in strikes hanging around and then it completely

669
00:35:42,920 --> 00:35:45,799
Speaker 1: falls off the table. This is freedom to move, and

670
00:35:45,840 --> 00:35:48,560
Speaker 1: what you're seeing this morning is definitely freedom to move

671
00:35:48,600 --> 00:35:51,040
Speaker 1: to the downside. Look and camera Christ with us with

672
00:35:51,120 --> 00:35:54,279
Speaker 1: down negative seven seven two the vix twenty two points

673
00:35:54,320 --> 00:35:56,640
Speaker 1: three for a better tape in the last five minutes

674
00:35:56,960 --> 00:36:00,960
Speaker 1: here often ugly almost down one thousand, opening to the

675
00:36:01,080 --> 00:36:03,960
Speaker 1: both of you and Luke, let me start with you

676
00:36:04,160 --> 00:36:07,240
Speaker 1: right now. What do institutions do when they see this drop?

677
00:36:07,320 --> 00:36:09,839
Speaker 1: I mean they're in cash? Are they deploying now? Or

678
00:36:10,080 --> 00:36:13,759
Speaker 1: how do they measure the mood the catharsis? Do they

679
00:36:13,760 --> 00:36:16,239
Speaker 1: revert to technical analysis? What do they do where they

680
00:36:16,320 --> 00:36:19,200
Speaker 1: say here's the entry point? Well, are they really in

681
00:36:19,320 --> 00:36:21,839
Speaker 1: cash is the first question. And if you've looked at

682
00:36:21,960 --> 00:36:23,840
Speaker 1: you know, like SMP five under, if you look at

683
00:36:23,880 --> 00:36:27,759
Speaker 1: the asset managers UH in the CFTC and their allocation

684
00:36:27,800 --> 00:36:30,600
Speaker 1: to stocks, that's those numbers in terms of what we

685
00:36:30,680 --> 00:36:33,239
Speaker 1: get are actually quite high. So the real question would

686
00:36:33,239 --> 00:36:36,440
Speaker 1: be is, I think, is how much is institutional dumping

687
00:36:36,480 --> 00:36:39,680
Speaker 1: on this and joining the party? And by the fact

688
00:36:39,719 --> 00:36:43,279
Speaker 1: that what you're seeing from this phase of the coronavirus

689
00:36:43,280 --> 00:36:46,520
Speaker 1: correction that's different from the late January one is all

690
00:36:46,520 --> 00:36:49,080
Speaker 1: of your beloved stocks are joining in and not only

691
00:36:49,160 --> 00:36:51,640
Speaker 1: joining in, their leading to the downside. So you know,

692
00:36:51,840 --> 00:36:54,239
Speaker 1: if you were all up in Microsoft, will be all

693
00:36:54,320 --> 00:36:57,040
Speaker 1: up in Apple, all up in those expensive text stocks,

694
00:36:57,160 --> 00:36:59,960
Speaker 1: especially in software, those are the ones that are get

695
00:37:00,160 --> 00:37:02,120
Speaker 1: hit more now, which does suggest that you know, there

696
00:37:02,200 --> 00:37:05,719
Speaker 1: is a bit more of an active selling component and

697
00:37:05,800 --> 00:37:09,080
Speaker 1: cutting even exposure to the stocks you love that is

698
00:37:09,160 --> 00:37:11,799
Speaker 1: taking place this time around. So Camra christ I'm looking

699
00:37:11,880 --> 00:37:15,239
Speaker 1: at the three months to the ten year treasury UH

700
00:37:15,360 --> 00:37:19,120
Speaker 1: minus seventeen here down eight and a half points today,

701
00:37:20,200 --> 00:37:21,719
Speaker 1: is that what is that telling you? Should we really

702
00:37:21,719 --> 00:37:23,920
Speaker 1: pay close attention to that because we've seen that go

703
00:37:24,040 --> 00:37:28,279
Speaker 1: negative in the past with no real implications. Yeah, I

704
00:37:28,320 --> 00:37:32,080
Speaker 1: mean that curve. I don't think it's particularly useful on

705
00:37:32,120 --> 00:37:34,680
Speaker 1: a sort of very very high frequency basis, because really

706
00:37:34,680 --> 00:37:38,760
Speaker 1: it's just telling what the tenure does because um, three

707
00:37:38,800 --> 00:37:41,400
Speaker 1: month bills don't really you know, three month bill yields

708
00:37:41,400 --> 00:37:44,960
Speaker 1: don't really um don't really move so much. Twos tens

709
00:37:45,480 --> 00:37:50,840
Speaker 1: perhaps offers a little more forward looking um uh color

710
00:37:51,200 --> 00:37:54,520
Speaker 1: and uh, it's interesting that curve hasn't really moved at

711
00:37:54,520 --> 00:37:57,600
Speaker 1: all today. It's been a parallel shift, UM to the

712
00:37:57,600 --> 00:38:00,479
Speaker 1: to the downside. What is the camera that's well said.

713
00:38:00,520 --> 00:38:03,160
Speaker 1: What is a parallel shift where all yields go down?

714
00:38:03,640 --> 00:38:05,919
Speaker 1: What is that signal to a fete? I mean, is

715
00:38:05,920 --> 00:38:11,719
Speaker 1: is that signaling to them? Signals signals cut rates and

716
00:38:11,800 --> 00:38:14,440
Speaker 1: keep them down. Um. Now, I think you could make

717
00:38:14,480 --> 00:38:17,640
Speaker 1: a pretty good argument that rape cuts UM, while they

718
00:38:17,719 --> 00:38:22,759
Speaker 1: might cheer up UM equity investors temporarily, would have a

719
00:38:22,880 --> 00:38:27,440
Speaker 1: vanishingly small impact on on the real economy. Um. You know,

720
00:38:27,640 --> 00:38:29,360
Speaker 1: not only in the United States, but sort of in

721
00:38:29,400 --> 00:38:32,680
Speaker 1: the rest of the world. UM. You know, uh, you know.

722
00:38:32,719 --> 00:38:35,760
Speaker 1: In terms of the previous discussion of what's actually changed, well,

723
00:38:35,880 --> 00:38:38,120
Speaker 1: I think something has changed, which is that you've started

724
00:38:38,120 --> 00:38:42,279
Speaker 1: to see an economic impact extend beyond China's borders. UM

725
00:38:42,680 --> 00:38:45,920
Speaker 1: for Venice to to cancel the carnival is I mean,

726
00:38:45,920 --> 00:38:48,160
Speaker 1: they're not doing that because interest rates are too high.

727
00:38:48,400 --> 00:38:51,200
Speaker 1: They're doing it as a public health scare. UM schools

728
00:38:51,200 --> 00:38:55,640
Speaker 1: are closing. That's something that that I think has impacted

729
00:38:56,600 --> 00:39:00,239
Speaker 1: or infected, if you will, um uh investor in best

730
00:39:00,480 --> 00:39:04,320
Speaker 1: investor consciousness, because it was kind of easy to write

731
00:39:04,320 --> 00:39:07,359
Speaker 1: off UM as an ephemeral thing or a contained thing,

732
00:39:07,400 --> 00:39:10,200
Speaker 1: and it was contained within China. But when you're starting

733
00:39:10,200 --> 00:39:13,720
Speaker 1: to see business UM and the economy being impacted outside

734
00:39:13,719 --> 00:39:16,279
Speaker 1: of China, then it's kind of like who let the

735
00:39:16,280 --> 00:39:18,600
Speaker 1: dogs out? And how do we get them back in

736
00:39:18,640 --> 00:39:21,799
Speaker 1: the cage? And that's a that's a more difficult proposition.

737
00:39:22,000 --> 00:39:23,960
Speaker 1: Kevin Christ, thank you so much for joining us in

738
00:39:24,000 --> 00:39:27,520
Speaker 1: a short notice today with Bloomberg of course, looking particularly

739
00:39:27,520 --> 00:39:29,920
Speaker 1: at the cross at space, Paul Sweni and Tim King

740
00:39:30,000 --> 00:39:34,360
Speaker 1: worldwide with our special coverage, we are without commercial interruption

741
00:39:34,480 --> 00:39:36,840
Speaker 1: in this special half hour getting the markets open. We

742
00:39:36,920 --> 00:39:40,200
Speaker 1: opened near negative one thousand, and the down down negative

743
00:39:40,239 --> 00:39:44,200
Speaker 1: eight three seven down. We went captured, the bid, bounced

744
00:39:44,239 --> 00:39:46,200
Speaker 1: back up, and we went back a little bit with

745
00:39:46,239 --> 00:39:49,359
Speaker 1: a vix was a twenty four handle now twenty two

746
00:39:49,400 --> 00:39:53,080
Speaker 1: point seven eight. The yield is in ten basis points

747
00:39:53,160 --> 00:39:56,640
Speaker 1: were in eleven earlier one point three six seven two

748
00:39:56,680 --> 00:40:00,120
Speaker 1: on the tenure, Luke, is it general? You know? I

749
00:40:00,080 --> 00:40:02,480
Speaker 1: I make jokes about your three Bloombergs, but it's true.

750
00:40:02,719 --> 00:40:05,960
Speaker 1: It isn't What is? What is? That's a hell of

751
00:40:06,000 --> 00:40:09,560
Speaker 1: a monthly bill that we say, thank you? What What

752
00:40:09,640 --> 00:40:12,759
Speaker 1: do you see right now off your Bloomberg screen? Like

753
00:40:12,840 --> 00:40:18,160
Speaker 1: what's the the delineating feature of panic or critically non panic?

754
00:40:19,600 --> 00:40:21,960
Speaker 1: To me, it'll still be kind of the the starting

755
00:40:22,000 --> 00:40:24,880
Speaker 1: point where we were for this and how quickly things change.

756
00:40:25,000 --> 00:40:27,960
Speaker 1: So like equity put call ratios in terms of the

757
00:40:28,000 --> 00:40:30,120
Speaker 1: volumes traded on the put side versus the call side,

758
00:40:30,480 --> 00:40:33,680
Speaker 1: they've been below one pretty much every day this year,

759
00:40:33,719 --> 00:40:37,680
Speaker 1: a k more calls changing hands, then puts. I. I

760
00:40:37,760 --> 00:40:42,200
Speaker 1: want to see how dramatically something like that changes, just

761
00:40:42,280 --> 00:40:46,320
Speaker 1: like I want to see not only does the greed disappear,

762
00:40:46,440 --> 00:40:49,920
Speaker 1: but also does the demand for protection orally skyrocket, because

763
00:40:50,160 --> 00:40:53,279
Speaker 1: really you haven't had both things happen consistently. Even in

764
00:40:53,360 --> 00:40:57,359
Speaker 1: late January. He's so seventies. He's like Wall Street he's

765
00:40:57,400 --> 00:40:59,840
Speaker 1: wearing a shirt today that could have been worn with

766
00:41:00,080 --> 00:41:04,880
Speaker 1: leud Wolfson, Gordon g Michael Holland would have warned twenty

767
00:41:04,960 --> 00:41:07,560
Speaker 1: years ago. It's got the blue stripe, that's got the

768
00:41:07,600 --> 00:41:11,200
Speaker 1: Glary Caudlow statement blue stripe shirt with the white cord.

769
00:41:11,280 --> 00:41:15,440
Speaker 1: And this this is my Kevin really special pull off

770
00:41:15,480 --> 00:41:20,200
Speaker 1: something like this. It's very it's very fashion forward. Daward

771
00:41:20,440 --> 00:41:24,200
Speaker 1: Ay time joining us with Lucawa. We have Gina Martin Adams. Uh.

772
00:41:24,440 --> 00:41:29,319
Speaker 1: She's our strategist for Bloomberg Intelligence giving us I think

773
00:41:29,360 --> 00:41:32,320
Speaker 1: so yes, she that's kind of where she was. So Gina,

774
00:41:32,400 --> 00:41:35,480
Speaker 1: thanks so much for joining us. Give us your perspective

775
00:41:35,520 --> 00:41:39,120
Speaker 1: on this opening here and what may be different here

776
00:41:39,880 --> 00:41:43,680
Speaker 1: for the US equity markets. Well, I think the equity

777
00:41:43,719 --> 00:41:46,839
Speaker 1: market has been riding on the hotels of the better

778
00:41:46,840 --> 00:41:50,320
Speaker 1: than expected fourth quarter earning season and able to therefore

779
00:41:50,480 --> 00:41:56,080
Speaker 1: dismiss underlying weaknesses in the earning stream related to coronavirus

780
00:41:56,239 --> 00:42:01,000
Speaker 1: um dampened outlook which has emerged in revision. It's pretty persistently.

781
00:42:01,000 --> 00:42:04,399
Speaker 1: But now the earning season is fading, and you've had

782
00:42:04,520 --> 00:42:07,680
Speaker 1: really strong spikes in a sort of risk off tone

783
00:42:07,719 --> 00:42:10,919
Speaker 1: across other asset classes. The equity market is following suit.

784
00:42:11,120 --> 00:42:13,840
Speaker 1: So if you actually look at the technicals of the

785
00:42:13,840 --> 00:42:16,200
Speaker 1: equity market, the two week rally that we had in

786
00:42:16,360 --> 00:42:19,040
Speaker 1: early February was really running on steals anyway. It was

787
00:42:19,120 --> 00:42:22,560
Speaker 1: largely supported by just a few names and tech and

788
00:42:22,760 --> 00:42:25,840
Speaker 1: some defensive rotation into utilities. So it was signaling that

789
00:42:25,880 --> 00:42:28,400
Speaker 1: the equity market was on fairly weak footing as it was.

790
00:42:29,160 --> 00:42:31,000
Speaker 1: But I do think that the end of earning season

791
00:42:31,640 --> 00:42:34,080
Speaker 1: was inevitably going to be difficult for stocks, and we're

792
00:42:34,120 --> 00:42:37,000
Speaker 1: going to go through a period of churning here, probably

793
00:42:37,040 --> 00:42:40,280
Speaker 1: a modest correction related to the fact that the economic

794
00:42:40,320 --> 00:42:42,439
Speaker 1: outlook is not going to improve in the short run

795
00:42:42,480 --> 00:42:44,359
Speaker 1: and estimates are a little too high for the next

796
00:42:44,400 --> 00:42:48,120
Speaker 1: couple of quarters of growth. The rule of thumbs as

797
00:42:48,120 --> 00:42:51,879
Speaker 1: a correction, is that still true or the markets so

798
00:42:51,960 --> 00:42:55,600
Speaker 1: adjusted or boloxed up right now that we're on the

799
00:42:55,640 --> 00:42:59,080
Speaker 1: cusp of a correction? Now, which is it? You know,

800
00:42:59,200 --> 00:43:02,120
Speaker 1: I think it's some the arbitrary, honestly, Tom, it's a

801
00:43:02,120 --> 00:43:04,839
Speaker 1: ten percent is known as the correction, is known as

802
00:43:04,840 --> 00:43:07,319
Speaker 1: a bear market. Some people would say we haven't had

803
00:43:07,360 --> 00:43:09,960
Speaker 1: any bear markets over the course of the last ten years.

804
00:43:10,040 --> 00:43:14,040
Speaker 1: I would say, we've actually had three, maybe even four,

805
00:43:14,320 --> 00:43:16,760
Speaker 1: just based on the fact that we had very severe

806
00:43:16,840 --> 00:43:21,440
Speaker 1: contraction in the equity market nearing. So, you know, I

807
00:43:21,440 --> 00:43:24,840
Speaker 1: think that any correction always feels somewhat difficult, whether it

808
00:43:24,920 --> 00:43:28,160
Speaker 1: be five percent, ten percent, or fifteen percent, particularly when

809
00:43:28,160 --> 00:43:30,920
Speaker 1: in the company's of really strong spike and volatility and

810
00:43:30,960 --> 00:43:35,160
Speaker 1: a strong risk off tone. That's likely what we're in

811
00:43:35,280 --> 00:43:38,520
Speaker 1: for um at least for the next couple of days.

812
00:43:38,560 --> 00:43:41,480
Speaker 1: Just the massive rally that we saw in gold, the

813
00:43:41,640 --> 00:43:44,200
Speaker 1: big rally we saw in the thirty year on Friday,

814
00:43:44,239 --> 00:43:46,160
Speaker 1: would have indicated that we were in for weakness at

815
00:43:46,239 --> 00:43:48,120
Speaker 1: least in the short run here in the equity market.

816
00:43:48,160 --> 00:43:52,320
Speaker 1: And I think unless you get some really really strong

817
00:43:52,360 --> 00:43:55,919
Speaker 1: earnest results from the retailers, which is highly unlikely, it's

818
00:43:56,080 --> 00:43:57,880
Speaker 1: just going to continue for the near terms, kind of

819
00:43:57,880 --> 00:43:59,799
Speaker 1: blowing off some of the excess that we had to

820
00:43:59,800 --> 00:44:02,040
Speaker 1: see left earlier this year. Well, I look for a

821
00:44:02,160 --> 00:44:06,000
Speaker 1: forward your team and they're writing this afternoon from Bloomberg Intelligence,

822
00:44:06,080 --> 00:44:09,960
Speaker 1: Gina Martin Adams out of all of our equity coverage today, Paul, Yeah,

823
00:44:10,239 --> 00:44:12,040
Speaker 1: look at you know, I'm looking at my commodity screen

824
00:44:12,080 --> 00:44:14,839
Speaker 1: that g l C O screen, which is just for us,

825
00:44:14,960 --> 00:44:17,600
Speaker 1: you know, equity people just the savior. And I'm seeing

826
00:44:17,680 --> 00:44:21,279
Speaker 1: so much red across the commodities uh space here And

827
00:44:21,440 --> 00:44:24,440
Speaker 1: is this just you know, the US equity markets just

828
00:44:24,520 --> 00:44:26,719
Speaker 1: kind of catching up with what commodity has been telling us,

829
00:44:26,719 --> 00:44:30,399
Speaker 1: which is global growth is you know, tepid at best

830
00:44:30,480 --> 00:44:32,719
Speaker 1: and may even be at risk with this coronavirus. Is

831
00:44:32,760 --> 00:44:34,120
Speaker 1: that kind of we're just seeing maybe a little bit

832
00:44:34,120 --> 00:44:37,399
Speaker 1: of catchup, as maybe Gina suggested, Yeah, I totally think

833
00:44:37,480 --> 00:44:39,920
Speaker 1: there's you know, that's that's the way to frame it

834
00:44:39,920 --> 00:44:41,799
Speaker 1: when you look at how commodities have been on a

835
00:44:41,840 --> 00:44:45,799
Speaker 1: sustained basis coppercruede week for quite a while. Commodities have

836
00:44:45,960 --> 00:44:50,560
Speaker 1: been showing the demand implications of the coronavirus for quite

837
00:44:50,560 --> 00:44:54,520
Speaker 1: some time. Equity markets have been focused on the temporary

838
00:44:54,560 --> 00:44:57,440
Speaker 1: supply implications of the coronavirus for quite a while. So

839
00:44:57,480 --> 00:44:59,680
Speaker 1: the kind of scaring that circle here is is a

840
00:44:59,760 --> 00:45:01,799
Speaker 1: law of what we see. And one one thing that's

841
00:45:01,800 --> 00:45:04,160
Speaker 1: really jumping out to me right now is I'm looking

842
00:45:04,160 --> 00:45:07,480
Speaker 1: at implied correlations for the SMP five hundred, So the

843
00:45:07,520 --> 00:45:10,600
Speaker 1: extent to which things are expected to move together, you know,

844
00:45:10,680 --> 00:45:13,920
Speaker 1: generally in a crisis. Does one do that? Uh, the

845
00:45:14,160 --> 00:45:17,360
Speaker 1: SPX one month, I see bee ball index on your terminal.

846
00:45:18,000 --> 00:45:20,480
Speaker 1: And so one thing that's really struck me is this

847
00:45:20,520 --> 00:45:23,600
Speaker 1: was one of the rare occasions where you had correlations spike,

848
00:45:23,840 --> 00:45:28,000
Speaker 1: implied correlations spike in late January and then immediately immediately

849
00:45:28,040 --> 00:45:30,319
Speaker 1: fade to where they were before. Generally, when you have

850
00:45:30,400 --> 00:45:33,120
Speaker 1: a spike and implied correlations, it means, hey, there's some

851
00:45:33,200 --> 00:45:35,600
Speaker 1: kind of macro thing going on that we're going to

852
00:45:35,640 --> 00:45:37,879
Speaker 1: worry about for a while. It's gonna be some kind

853
00:45:37,920 --> 00:45:39,959
Speaker 1: of episode that we have to work our way through.

854
00:45:40,320 --> 00:45:42,160
Speaker 1: Been the case for, you know, for the trade war,

855
00:45:42,360 --> 00:45:45,160
Speaker 1: was the case in late was the case during the

856
00:45:45,160 --> 00:45:49,799
Speaker 1: the Chinese hard landing fears. Right now those are still

857
00:45:49,840 --> 00:45:51,920
Speaker 1: probably subdued. So if you're looking for a way for

858
00:45:52,000 --> 00:45:54,880
Speaker 1: volatility to move up, it's through this conduit where we

859
00:45:54,920 --> 00:45:57,759
Speaker 1: start pricing in everything moving together to the downside. And

860
00:45:57,800 --> 00:46:00,160
Speaker 1: I just put that up on the screen, and we're

861
00:46:00,160 --> 00:46:03,120
Speaker 1: now out the four standard deviations is a general of

862
00:46:03,160 --> 00:46:06,919
Speaker 1: four standard deviation. Move is where the sweat clicks in

863
00:46:07,440 --> 00:46:09,960
Speaker 1: and we're getting there. We're getting we're getting there, but

864
00:46:10,000 --> 00:46:13,200
Speaker 1: we're not quite there yet. So looking at the you know,

865
00:46:13,200 --> 00:46:15,279
Speaker 1: we we talk a little bit about crude oil and

866
00:46:15,280 --> 00:46:18,640
Speaker 1: it's down about four percent or four point two barrel.

867
00:46:18,840 --> 00:46:20,160
Speaker 1: I mean, is that kind of a is that a

868
00:46:20,200 --> 00:46:23,680
Speaker 1: place where people should look for, you know, where is

869
00:46:23,719 --> 00:46:26,600
Speaker 1: global growth going to be? And if I see weakness

870
00:46:26,600 --> 00:46:29,840
Speaker 1: in that commodity, that's really a flag for me. I

871
00:46:29,880 --> 00:46:32,960
Speaker 1: mean probably copper would be the even bigger one, or

872
00:46:33,000 --> 00:46:35,520
Speaker 1: the or the complementary, or you know, at least both

873
00:46:35,520 --> 00:46:39,160
Speaker 1: of them telling the same story. Yeah, it's I would

874
00:46:39,200 --> 00:46:43,320
Speaker 1: say definitely commodities are pricing in the lower demand global

875
00:46:43,320 --> 00:46:46,799
Speaker 1: growth outlook much more than any asset class has been

876
00:46:46,960 --> 00:46:50,120
Speaker 1: for a while. But hey, commodities have been financialized for

877
00:46:50,200 --> 00:46:53,359
Speaker 1: quite some time, more than they are necessarily indicative of

878
00:46:53,360 --> 00:46:56,680
Speaker 1: supply demand conditions for real end users for quite some time.

879
00:46:56,920 --> 00:46:59,440
Speaker 1: So probably more of a tendency to overshoot in both cases.

880
00:46:59,560 --> 00:47:02,279
Speaker 1: Very good. I don't knowough jargon from Calah, but I

881
00:47:02,360 --> 00:47:04,319
Speaker 1: learned a new function today, so you know that was

882
00:47:04,480 --> 00:47:06,919
Speaker 1: there was as good as Stewart Kaiser from ubs time.

883
00:47:07,120 --> 00:47:09,440
Speaker 1: It was pretty good. Do we get through this without

884
00:47:09,480 --> 00:47:12,520
Speaker 1: mentioning a backup goaltender, because that's that's that's how bad

885
00:47:12,600 --> 00:47:15,719
Speaker 1: things must be right now, Michael Reagan with us here

886
00:47:15,760 --> 00:47:17,720
Speaker 1: as we look at that, He's trying to log onto

887
00:47:17,760 --> 00:47:21,840
Speaker 1: the hurt when I'm like the backup goaltender around here

888
00:47:21,920 --> 00:47:26,960
Speaker 1: driving the surveillance. When when the market goes down a

889
00:47:26,960 --> 00:47:30,880
Speaker 1: thousand points, Michael, can you log on? I'd rather not.

890
00:47:30,920 --> 00:47:32,279
Speaker 1: I should have said I should have work at home.

891
00:47:32,320 --> 00:47:34,520
Speaker 1: But what is the color of the market you? Michael

892
00:47:34,560 --> 00:47:37,560
Speaker 1: Reagan was, folks, leading just all of our intellectual coverage

893
00:47:37,560 --> 00:47:40,279
Speaker 1: in Bloomberg News on the equity markets. You go into

894
00:47:40,280 --> 00:47:43,080
Speaker 1: a morning call, what's the theme that you want to

895
00:47:43,120 --> 00:47:47,200
Speaker 1: attack here? Negative seven sixties seven on the dough? Well,

896
00:47:47,280 --> 00:47:49,520
Speaker 1: I guess you know. Obviously the question on everyone's mind

897
00:47:49,560 --> 00:47:53,080
Speaker 1: is gonna be how bad will this get? God bless

898
00:47:53,080 --> 00:47:54,960
Speaker 1: anyone who can even attempt to try to answer that.

899
00:47:55,000 --> 00:47:58,200
Speaker 1: I mean, I think obviously the Italian outbreak is really

900
00:47:58,360 --> 00:48:01,680
Speaker 1: the focus of everyone uh ire right now. And just

901
00:48:01,719 --> 00:48:03,960
Speaker 1: looking at sort of the leadership in the stock market,

902
00:48:04,160 --> 00:48:06,040
Speaker 1: what do you see that? Well, a lot of that

903
00:48:06,160 --> 00:48:09,600
Speaker 1: sort of the high flyers are leading your Apple, Microsoft, Amazon,

904
00:48:09,640 --> 00:48:12,000
Speaker 1: the ones that we're really sort of leading this this

905
00:48:12,239 --> 00:48:15,640
Speaker 1: uh rally on the way up. What I find interesting

906
00:48:15,640 --> 00:48:17,799
Speaker 1: he's looking at the healthcare stocks. They're pretty much down

907
00:48:17,840 --> 00:48:20,279
Speaker 1: across the board. I mean, Gillyad is up because they

908
00:48:20,360 --> 00:48:22,720
Speaker 1: might have the vaccine. What are you seeing in Johnson

909
00:48:22,719 --> 00:48:25,160
Speaker 1: and Johnson might have a well that's the thing. Everything's

910
00:48:25,239 --> 00:48:29,439
Speaker 1: down pretty steeply. And I find it interesting because less

911
00:48:29,480 --> 00:48:32,160
Speaker 1: we forget Bernie Sanders did win a pretty a pretty

912
00:48:32,160 --> 00:48:36,600
Speaker 1: big better than my mind had was thirty nine percent, folks,

913
00:48:36,600 --> 00:48:40,440
Speaker 1: And he's clocking here with yeah, so I would be curious.

914
00:48:40,440 --> 00:48:43,799
Speaker 1: It's hard to isolate what is happening to say, the

915
00:48:43,840 --> 00:48:47,080
Speaker 1: managed care stocks. United Healthcare is down like seven, so

916
00:48:47,160 --> 00:48:49,800
Speaker 1: obviously that you know, could could be a lot of

917
00:48:49,800 --> 00:48:52,240
Speaker 1: the coronavirus fear. But you also gotta wonder if Bernie

918
00:48:52,280 --> 00:48:53,920
Speaker 1: is in the market a little bit too. I don't know,

919
00:48:54,040 --> 00:48:56,400
Speaker 1: but um it's hard to separate the two because obviously

920
00:48:56,400 --> 00:48:58,239
Speaker 1: a coronavirus is not gonna be good for your your

921
00:48:58,239 --> 00:49:01,600
Speaker 1: healthcare stocks, but neither is so um uh, you know,

922
00:49:01,640 --> 00:49:04,040
Speaker 1: I would love to see what this market was would

923
00:49:04,040 --> 00:49:05,600
Speaker 1: look like this morning if it had just been the

924
00:49:05,600 --> 00:49:07,920
Speaker 1: Bernie news over the weekend and not the not the virus.

925
00:49:07,960 --> 00:49:11,040
Speaker 1: And Michael Reagan with us and he'll continue on Bloemark

926
00:49:11,120 --> 00:49:13,520
Speaker 1: Radio with reports through the day. Right now, we have

927
00:49:13,600 --> 00:49:16,440
Speaker 1: to digress for a global audience for something that was

928
00:49:16,719 --> 00:49:20,000
Speaker 1: absolutely extraordinary this weekend. There's been a lot of coverage

929
00:49:20,000 --> 00:49:23,760
Speaker 1: in it in America and certainly within Canada as well.

930
00:49:23,800 --> 00:49:26,719
Speaker 1: This is where two goalies get hurt and you don't

931
00:49:26,760 --> 00:49:29,880
Speaker 1: have another goalie, and every team has an agreement that

932
00:49:29,920 --> 00:49:33,279
Speaker 1: there's always an emergency goalie who if they play, gets

933
00:49:33,400 --> 00:49:37,160
Speaker 1: five hundred dollars and they get to keep their jersey. Yeah,

934
00:49:37,200 --> 00:49:41,080
Speaker 1: it's it's in the contract and the agreement, and this occurs,

935
00:49:41,080 --> 00:49:45,120
Speaker 1: but it doesn't occur like it did this weekend in Toronto.

936
00:49:45,800 --> 00:49:49,000
Speaker 1: Is Carolina had two people injured and Luke it was

937
00:49:49,160 --> 00:49:53,920
Speaker 1: absolutely extraordinary, without question, I've never seen it before. Tavarus

938
00:49:54,040 --> 00:49:57,400
Speaker 1: took the giant John Tavirus took that first shot and

939
00:49:57,440 --> 00:50:01,000
Speaker 1: he looked like a goalie completely out of his well

940
00:50:01,320 --> 00:50:03,719
Speaker 1: that's because he was a goalie completely out of his

941
00:50:03,800 --> 00:50:07,239
Speaker 1: league too. So for backstory here, the Carolina Hurricanes two

942
00:50:07,239 --> 00:50:10,480
Speaker 1: goalies injured, they had to turn to the leaf's appointed

943
00:50:11,239 --> 00:50:14,560
Speaker 1: back up, who is the Zamboni drivers, and the teams

944
00:50:15,800 --> 00:50:18,680
Speaker 1: have an in Toronto, but so in front of a

945
00:50:18,800 --> 00:50:22,040
Speaker 1: home team, we embarrass ourselves like this so Carolina has

946
00:50:22,080 --> 00:50:25,480
Speaker 1: to turn to the Merley's Zamboni driver. The Toronto Marley

947
00:50:25,560 --> 00:50:29,080
Speaker 1: Zamboni driver ted into net before he had even faced

948
00:50:29,080 --> 00:50:32,000
Speaker 1: a shot. He hadn't even bigger lead than he started with.

949
00:50:32,160 --> 00:50:34,359
Speaker 1: He himself got a shot on net, banking it off

950
00:50:34,400 --> 00:50:36,719
Speaker 1: the boards, and he made I believe, seven saves in

951
00:50:36,760 --> 00:50:39,239
Speaker 1: the third period. But Tom, if you remember the old

952
00:50:39,280 --> 00:50:42,279
Speaker 1: Scott Stevens era in New Jersey Devils, I have not

953
00:50:42,560 --> 00:50:46,279
Speaker 1: seen a team play suffocating defense like that there was.

954
00:50:46,440 --> 00:50:48,319
Speaker 1: You couldn't get a puck through to the net. Not

955
00:50:48,440 --> 00:50:51,120
Speaker 1: that the Leafs are really trying. This will go down

956
00:50:51,200 --> 00:50:54,400
Speaker 1: is perhaps more embarrassing than the four one collapse in

957
00:50:54,400 --> 00:50:58,640
Speaker 1: Game seven to the Brewers look very quickly. And we'll

958
00:50:58,640 --> 00:51:01,640
Speaker 1: expand on this later. Ex going to our audience, his

959
00:51:01,840 --> 00:51:04,879
Speaker 1: junior banus, I was at a junior B level when

960
00:51:04,880 --> 00:51:07,520
Speaker 1: I was you know, Colorado, million years ago. But what

961
00:51:07,560 --> 00:51:12,480
Speaker 1: does junior B now mean versus the minors or the NHL.

962
00:51:13,600 --> 00:51:15,960
Speaker 1: I would say Junior B in a lot of cases

963
00:51:16,040 --> 00:51:19,120
Speaker 1: means you care about the sport, you stuck around to

964
00:51:19,160 --> 00:51:21,279
Speaker 1: play it for a while, but you were not one

965
00:51:21,280 --> 00:51:25,160
Speaker 1: of the top tier talented guys. You're nobody had a

966
00:51:25,239 --> 00:51:28,400
Speaker 1: chance at this level to play an the NHL. Essentially,

967
00:51:28,640 --> 00:51:30,520
Speaker 1: oh yeah, that's you. You're not going to go to junior.

968
00:51:30,560 --> 00:51:33,720
Speaker 1: Being Austin Matthews had the puck off the left side

969
00:51:34,760 --> 00:51:38,319
Speaker 1: in his stomach. He shot it. Even I could have

970
00:51:38,360 --> 00:51:41,640
Speaker 1: stopped that. He he dotted the eye in canes. As

971
00:51:41,680 --> 00:51:45,759
Speaker 1: we say, see the suffering there. It's like if he

972
00:51:45,920 --> 00:51:49,640
Speaker 1: was long Apple calls here yesterday, Luke Kawa, Thank you

973
00:51:49,680 --> 00:51:52,279
Speaker 1: so much for that perspective on the markets, and of

974
00:51:52,320 --> 00:51:55,319
Speaker 1: course I'm truly an historic moment. Thanks for listening to

975
00:51:55,400 --> 00:51:59,880
Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on

976
00:52:00,000 --> 00:52:05,799
Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm

977
00:52:05,840 --> 00:52:09,160
Speaker 1: on Twitter at Tom Keene before the podcast. You can

978
00:52:09,200 --> 00:52:12,360
Speaker 1: always catch us worldwide. I'm Bloomberg Radio.