Luxury Sector Hurt by Coronavirus

me here. So, you know, we've been kind of talking about a week where there were so many uncertainties and kind of craziness, whether it was the Iowa Caucuses, whether it's continued UM concern about the virus, just watching Tesla go up, they go down, and yet investors continue to push the market higher. Um, how do you explain that? Explained interest rates so low? And we always talk about

liquidity in the market. Liquidity is strong, uh. And you know, when you take term liquidity down to the most ground your level, what we used to say was there's never liquidity on the day you need. I mean, you can't find someone to buy something from you. But the point is that before you get to that point, you take a look at the positives in terms of financial conditions, low interest rates, credit is available, all of those, and

you have a consumer that has jobs. As we saw today, the economic data releases have been surprising to the upside for the most part again today, Yeah, exactly, And and so you you weigh it, and what you try to do is you try to look through the crisis, look through an episode of a virus. And obviously sometimes you're wrong, because we saw buying at the beginning of the week. If this thing were to continue and spread and and and and get much worse, the market is going to

sell off quite a bit more. So maybe you were early. But nonetheless, the buy on the dip mentality is there. It's been ingrained in us, is it just? I mean, if we were not in such a low rated vironment, would that be a whole different story, even if you still had a strong jobs market and so on and so forth, would we be telling a different story. Yes, If if the FED were poised to be in continue to raise rates, of course, there'd be worried that the raising of rates did not match up with an economy

that was suffering from global growth concerns. And so you know, one of the places where we've seen people get worried. Quincy is luxury names. And you think about Hong Kong, even before this virus, with the protest there in Hong Kong, how do you look at that part of the market. Well, you take a look at that, and you saw today some of the down grades because of that, because the Chinese are not traveling, and it's not even in places

where it's particularly Chinese. It's where they traveled to where the pressure husband and that stands to reason. And the question always becomes do you think this is going to be better in three months time? And what we see happening is everyone is comparing it with czars. But it

was a different scenario back then. China wasn't as much an important part of the global economy, by the way, it was about four point five eight percent versus today where it's over nineteen percent of the global economy, and they were pushing much more stimulus with cheap loans into that economy. So you had a V shaped recovery. How do we know we're going to have a V shaped

recovery now? That said, China is pushing stimulus in already and one of the catalysts to get this market moving this week was we saw liquidity coming into the Chinese market. They are going to continue that until they have uh you know the green shoots that we saw come back.

But I mean, I think that's been the story, right Quincy Quincy over the last year, not the last year, at last decade, certainly off the crisis that all of the world central banks when there's some kind of crisis, if policy makers can't get their act together, they're going to be there to prop up the financial markets or whatever needs to be done to make sure things don't come undone like we saw during the crisis. That's right. I mean last year everyone talks about in rest rate

cuts last year from forty nine central banks. Central banks are continuing to lower rates this year. Uh, and if the slowdown continues, you're going to see more rate cuts. The chairman is going to testify this week. Uh. The report came out and talks about the global slowdown, the catalyst. They're going to ask him, what are you going to do what? And concerns. We were talking about this about

an hour ago. Are Vin Signorella just saying because that that FED report that came out today talking about concerns about how low interest rates had elevated asset valuation. Is not the first time that we've heard the Fed say this, but it was interesting that they kind of pushed this

a little bit further. Yes, and that's that's always been a concern, by the way, for Chairman Powell when he was on the board, he would give speeches lower for longer is going to cause asset bubbles at some point, and he said, have to get rates to match where the economy is. He tried that. You saw how that worked out. Give us one and you know, I don't know.

I know you can always name stocks and things because there one interesting investment idea that's caught your attention right now in this particular environment, in this environment where there's a where there's a slow projected slow down. And if I had to worry gold gold has is the we've talked about gold is like a lot of people have moved into gold, big time. They moved they moved into

gold when they move into treasuries. And then what typically happens is that this word to continue and their more concerns. Utilities get the bed. Utilities are overbought. But nonetheless you will put money because the tenure yield comes down. It's the consummate bond surrogate along with reads. But you're going to look for something that is going to going to hold up, and that's what's going to hold up. And you know, and as you heard earlier today where you're

just referring to that, the algorithms come in. You don't even have a chance to move in. The algorithms will do the job for you the minute the headline is quasi negative. Yeah, yeah, totally exactly. All right, Quincy Crosby, thank you so much, Chief Market Strategies for Prudential Financial based over there in Newark, New Jersey. Here with us in New York City today