As if the last few weeks weren’t volatile enough, this one was even worse. Swings were so wild that exchange-rules forced trading halts – multiple times. Thursday saw the worst day for the S&P 500 since 1987’s Black Monday crash, and the record long bull market came to a close. Cracks are forming in the credit markets, and classic hedges aren’t working the way they should. Lauren Goodwin, an economist and multi-asset portfolio strategist at New York Life Investments, joins the "What Goes Up" podcast to explain why she’s not yet buying into this dip.
Some highlights from the conversation: "In the last 10 years, we’ve gotten very used to buy the dip. Just the idea that if you had a really bad week, that there was always a reason to think positively as long as things weren’t going really, really badly. We’ve had monetary policy almost always stepping in when we’ve hit roadblocks, mid-cycle slowdowns. Meanwhile, over the course of that 10 years, profit conditions have been decelerating if not deteriorating," she said. "We’ve been defensively positioned in our portfolio for six months, saying look it’s probably worth it even if we’re a year early because at some point we’ll get a catalyst. I did not know that coronavirus would be the catalyst, but I’m not a buyer until I see a real reason for durable upside. And case volumes still rising, credit markets still figuring this out, that catalyst will certainly come. But it’s not right now." "One of the really interesting things, if we can take a step back from everything that’s happening right now, is just how unreliable of a signal economic data is going to give us upcoming. So recession, no recession, I mean look around. It feels almost certain that we will have recession or recession-like circumstances here in the U.S. And even if they’re transitory, they could be quite severe. What’s going to be really interesting is we’re not going to be able to tell what the official read on that is."
Also joining the podcast is Bloomberg MLIV blogger Kriti Gupta, who discusses what an oil-price war means for global economies and energy firms.
Running time 27:45