Transcripts For BLOOMBERG Whatd You Miss 20240713 : comparem

Transcripts For BLOOMBERG Whatd You Miss 20240713

High where we were about a month ago but the Dow Jones Industrial average having it best weekly gain on a percentage basis going back to 1938. That is get back into our conversation. Tte is still with us. Chief investment strategist. Scarlet fu is with us and Joe Weisenthal as well. Joe, you want to pick this up . Joe i am struck by a rough selloff once again going into the closing, going into an uncertain weekend. We can be certain we will see a lot of headlines of rising case counts in more cities across the u. S. And europe. They are not slowing down the way we would like to see yet. The other headline is this has been the best week for the dow since 1938. I dont remember the last time, if ever, we have had so many superlatives in a week going back to the 1930s. Brent, back to you. Let us get more into the headline vacuum we will get into. We will not get instant policy soonion from d. C. Anytime that we will get more stories about rising case counts, rising deaths. Headlines that are extremely difficult for people to emotionally digest. Does that make it harder in the shortterm to expect any reduction in volatility . We need morek clarity on some of those things that you mentioned. Get information about how many have been infected and how many cases there are because we dont know the denominator right now. Think there will be volatility. In times like these, volatility stays high but i dont think the market will hit the ultimate bottom until you get volatility stabilized. There is a vacuum. I think of your comments. I think of my role as a chief investment strategist for individual investments. And i think of your opening about different headlines. The superlatives. I just encourage people to not trade through this or think you can trade this event. The market is moving 19 or more per day. I just encourage investors to stay the course and not trade on emotions. Scarlet we have some headlines. The president will be signing the nearly 2 trillion stimulus bill. He has ordered General Motors to make those muchneeded ventilators. He has ordered gm to make them under the defense law. That has come to pass. We know there were threats that the president made that he would do so but he was hoping the private sector would pick it up on its own and move ahead. Gm and his partner are doing what they can right now even though there has been some confusion over the compensation from the federal government. We will keep you posted on that development. I want to go back to you brent on something that Different Countries have taken or undertaken following last weeks volatility and violet selloff. Her has been there was a lot of talk of closing the market last week in the u. S. Steve mnuchin talked about shortening the trading day. If you look overseas, u. K. , france, italy, they banded shortselling they banned shortselling. Do you think we will come back to this conversation on whether the u. S. Needs to take steps to close its markets or put restrictions in place like banning short sales of certain stocks . Are peoplee, there that want to put money to work that,s market, if you do you may not get it out in the future. I do think the ability to get money when you need and put it to work, to trade when you want to and have that liquidity is important. We should do everything we can to keep the markets open. As far as the shortselling rules , that is probably above my pay grade. I am more for open and free markets than not. Joe when you start to look at the folks who are in this market , whether they wanted to stay in or not, what is the guidance that you give folks now that we have gotten more clarity at least about the stimulus coming out of washington and maybe to a smaller extent the clarity regarding infection rates and how long this potential economic shutdown and Health Crisis might last . Aret when things hit that incredibly uncertain, we are all flying a little blind because none of us are medical professionals and quite frankly, there is even disagreement there. The better plan is to rely on longterm investing. Passtoo at some point will. I would not sell stocks. Every single way that you look in the past, the math dictates not to sell when there is panic. I would encourage people to keep going back to those and think october 2008, whether we had a bull market or not, that was not the ultimate bottom. People that held then were happy they did so. As violent as it has been on the be on the it could upside and i dont think you will be able to trade that against people that are set up better to trade than you are. Joe i want to go back to what you said. It has never been a good idea historically to sell into a panic. Your ownlso said for client that you dont see a lot of selling and you do see a lot of commitment to weathering through this. What is your overall gauge . Who is selling . Who is panicking . Coolre keeping their heads in deciding i can stomach this volatility right now . Who can stomach it and who is being washed out . Brent im not sure i know who those people are. If they could raise their hands, that would be great. Keeping your head is a best strategy going forward. I have done this for 25 years. ,nce you make the cell decision the decision to get back in becomes that much harder. You have two really hard decisions, make the second one. When i compare these events to the last two bear markets, the one in 2001 involved terrorism. In 2008, the great financial crisis was also really openended. This one i do think at some point based upon science and passed viruses and past andses, there will be an at some point and on the opposite side will the an American Economy that has adopted and pushed forward. Joe a hopeful note. Our thanks to chief investment strategist, brent schutte. That does it for the closing bell. Up next, whatd you miss. This is bloomberg. Bloombergsom headquarters, i am joined by scarlet fu and Joe Weisenthal. They are sheltering in place. Im looking at stocks finishing in the red following a threeday advance. There was a headline about the fed reducing its daily purchases. That may have accelerated the losses into the cause but it was a down day from the getgo. That does not take away from the gains this week. Looking at the market overall, some say stocks are showing signs of fatigue. Credit risk rising after staging its best weekly rebound since 2011. We want to bring in paul, founder and chief investment aticer of the Solutions Team a investment. It is march 27. We are approaching months and, quarter and, in fiscal year end. We ended the week down, we did have a pretty strong week overall. How much of the rebound that we saw in stocks earlier this week was tied to rebalancing following the deep selloff in treasuries . And how much more rebalancing is there to go . Managerst portfolio see rebounds at the end of the month. General, the closer to month then you rebound the closer you are to tracking your benchmark. People dont want to take unintentional bets. I chalk it up to an oversold market. The news being fully discounted at the moment plus the fiscal package. I dont think anyone thinks we are out of the woods. In washington, President Trump is set to sign the stimulus package we have been waiting for. The idea that a lot of that money will go to businesses big and small presumably to help avoid some of the mass layoffs that we had a taste of this week with unemployment claims numbers. When you look at the credit risk , when you look at the balance sheets, do we have enough cash on those balance sheets, do we have enough stimulus coming down the pipeline to help defer a massive amount of potential defaults . Paul the fact that the economy was in very good shape going into this and when you look at investmentgrade companies, they do have a tremendous amount of reserves and the ability to weather storms. That is a you get an Investment Grade rating. Those companies have to have done better than highyield companies which have been hard which have been hit harder. Investmentgrade companies should be able to weather the storm and with the fiscal help, Smaller Companies should as well. Joe where do you see or what would you look for in terms of an Economic Data on the virus itself, policy response etc. To say this is what a durable bottom looks like or at a minimum, this is what this is where a case can be made to go out on the risk spectrum instead of hanging out in safe credit or shortterm government bond. Paul that is key that is the key question. The three things we are looking for is a leveling out of the infection curve. We would like to see at level out from being exponential to flat. We could have more cases but not at an increasing rate. We want to see recession level pricing in the capital markets. We got pretty close to that last friday when things were down severely. Finally, complete washout of any bullish sentiment. Thatwould give the signal it is time to start adding to risk assets and equities. It is important to remember that almost 70 of the time in bear markets, we make a double bottom. And in some cases we will make a little a new low. It is a combination of the three things i stated plus recognizing that it is likely that we test the lows again before we make a durable rally here. Scarlet to follow up on your comment about recession level pricing, is that the same across Asset Classes . You mentioned that last week we may have seen it. We know credit leaves. Is there an asset class that lags . Paul i will turn that questioned the other way and say we are still in some cases at recession level pricing in some of the credit markets. There is a lot of opportunity there. A lot of the lower prices are caused by dislocation due to poor liquidity. We look at commercial backed securities which are down 12 18 from park on relatively good credit quality because people are coming in that have to have a bid. Same thing on Investment Grade. Investment etf was down 13 last week which was crazy. Tremendous value. There are leaders of value and there are things you can do right now without needing to buy a a lot of equity. You can buy things that are pretty cheap and highyield. In terms of laggards, the s p itself will probably be the laggard. I think it is too late for the equity market. And probably too late to get 100 conviction on those things i mentioned. Voyaour thanks to paul of investment management. Coming up this hour, Steve Ballmer speaks with our own emily chang, live. This is bloomberg. At the end of an extraordinary and volatile week. Which is in the middle of an even more volatile period. N, the to bring in been chief Investment Officer at qvr. When will the volatility slow down . Days in ae have a few row of 1 or 3 moves . Ben i dont think it will happen anytime soon. Withis a broken market terrible trading liquidity conditions and equities and fixedincome and commodities all over the place. Investors trying to move risk around at the end of the day like you did today with the 3 selloff rate at the close, like yesterday with the 3 rally in the last 10 minutes look at the equity futures market there is one future on the bid and when future of the offer. Other folks are coming into trade and you cant move the market in incredibly volatile ways. In there is a cliche, even normal times, whenever there is big movement, people shake their finger and say it was the algorithms or the robots trading the market. Can you decompose the move between discretionary, longterm traditional type investors versus moves driven by more systematic or quantitative strategy . . Ben there are a couple of different buckets to break down there. Ultimately, the problem in some sense given poor liquidity conditions are large block trade. People or institutions who are trying to move a lot of risk in a short amount of time. The category of robot trading algorithmically i really need to buy a billion dollars worth of stock and i will do that over the course of a day using a passive algorithm. That is quite fine and that is liquidity enhancing to the market. What we are seeing is for example, a huge market on close. That is investors who have traditionally used markets on close orders because they either want to replicate the close and often this is real money at institutions. Is a market with 100,000 or 200,000 for sale, how does that even work . That is inherently the problem. People need to adapt these Market Conditions to use more passive algorithmic abilities and they are not doing that. Joe we have seen the Federal Reserve come in and do a substantial number of things in an attempt to ease liquidity and that has eased some of the pure dollars strain we have seen. The dollar was down substantially this week. A sign of less dollar hoarding. The you sense they will need do you sense they will need to do more . How extensive is liquidity hoarding . Ben it is quite extreme. The types of programs they are running trying to put basic functionality back into deeply broken markets, they are probably going to need to be engaging for a while. The important thing to note and you alluded to this is there are many different kinds of liquidity. Is funding liquidity conditions. Hat is not their mandate theyre are concerned about market liquidity. Nothing the fed does directly has any bearing on the ability of investors to transact and move risk without making the market move in huge, erratic ways. Joe is market liquidity one to one correlated with great appetite . , that willeel better cause liquidity to improve . Ben the key thing really here is this is very different than 2008 for example. In 2008, the banks were under tremendous stress themselves and their was deep and systemic risk. What we did after 2008 was we systematically the risked derisked the banks. Doddfrank. What that means is the banks are in good shape and did not take rig losses at all and generally made a lot of money with derivatives and portfolios. The losers were hedge funds and Asset Managers providing banks with that tail risk. In some sense we have protected the banks. The flipside is that banks are not taking risks. They are no warehousing inventory or facilitating financial innovation. You have a stressed financial market. This is what the regulators wanted. The banks are not blowing up but maybe we are finding out that we went too far when thinking about how to keep markets functioning under stress. Joe thank you so much for your perspective. We will continue to watch. Qvr advisor, ben. Former microsoft ceo and l. A. Clippers owner Steve Ballmer joins us to discuss basketball, the economy, and the coronavirus. This is bloomberg. [ one more time by daft punk ] woo [ laughing ] woo play pop music no way dude, play rock music yeah woah no matter what music you like, stream it now on pandora with xfinity. And dont forget to catch trolls world tour. Lets party people one more time welcome to Bloomberg Television and to our Bloomberg Radio audience. I am joined by Steve Ballmer, the former ceo of microsoft and the owner of the l. A. Clippers. Always good to have you with us. About an ask you Important Initiative that you have been working on via usa fax. You started this organization to dig into data and you have been digging into data about coronavirus. You are releasing a slew of new facts today. Talk to us about what the data is telling you and the surprising trends youre seeing. Steve let me share a little bit. Faxmentioned we started usa usafacts focused on taking u. S. Government information and publishing it. It has been hard to service and bring together data about the disease all the way down to the county level. We have essentially been sourcing data from the cdc but from county Health Departments bringing it together and publishing it on a county by county basis. Information from the cdc itself and 20 Government Agencies for this amalgamated view of the information. Theink it points to importance of integrated Government Data telling the story. T emily we have all been overwhelmed by fax of the curve and the rising number of cases. In your estimation, how much worse is this outbreak going to get . Steve [laughter] i was someimply like kind of forecaster. We dont do that in general and specifically in this area i would not do it. If you take a look on a county basis at what is going on, you continue to see counties in ch the lives of new cases the rise of new cases continues on and almost exponential level. The epicenter at the outbreak where i live, we have started to see a gradual, gradual if you well, flattening of the curve made to believe that i can have some optimism. Not that people will suffer greatly from the disease but perhaps there is light at the end of the tunnel. Similar to what people saw in south korea and china than what people saw in italy. If you look at the data, with the right precautions, there is opportunity for progress. Emily you were also looking at the industries that will be hardest hit whether it is the airlines or restaurants and food services, where do you think we will see the biggest brunt of this economically . Of peopler 8 employed in america actually work in the for in the Food Service Industry and what i mean includes restaurants and bars. Not just Food Development and food growing and distribution. Food service. 8 of the population. A share is not that big of gdp, and mostly people look at gdp numbers, from an employment perspective where i think the rubber will meet the road in terms of how well people live people have to keep their jobs, have sick leave with the new senate deal that was approved yesterday, there is government relief coming and we are diving into that and bringing the relevant data to usafacts. Lowpaying jobs typically with out sick leave. , what is your view of the Market Going Forward . No one knows exactly which way it is going to go but i know youre still a huge holder in microsoft. It has managed to stay up the 1 trillion margaret market cap. What do you see in the bigger macroeconomic picture and for big tech . Steve not necessarily a prognosticator but at the same time, i think it is fair to assume that

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