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  • Missing a Rebound Almost as Scary as Getting Caught in a Selloff

Missing a Rebound Almost as Scary as Getting Caught in a Selloff

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Bloomberg Apr 8 22:18 · 28k Views

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  • 00:00 Paul, I'm going to ask you an extremely dangerous question.
  • 00:02 Is the worst of the sell off
  • 00:04 over now?
  • 00:05 I mean how can we possibly answer that, I suppose unless we know what is
  • 00:09 in the minds of those in the White House.
  • 00:13 Morning, Anna.
  • 00:14 Of course that would be that would be the easiest way to know whether the end is
  • 00:17 already with us.
  • 00:18 I think what we can say with a little bit more certainty is that at least for now, there are some signs of stabilization in the market.
  • 00:26 Yesterday was the worst ever day for the MSCI Asia Pacific Index.
  • 00:29 Today we've got a bounce
  • 00:31 likewise.
  • 00:32 And I think we got quite a lot of information from the price action in the US day to where we had markets down.
  • 00:38 Then that really huge rally on the unconfirmed reports,
  • 00:42 which proved
  • 00:43 or were subsequently denied about the idea that the tariffs could be pushed back.
  • 00:47 And we wobbled around after that and then stabilized a little bit.
  • 00:50 I think what people took away from that is this, this idea that it doesn't take much for the market to rally quite a long way.
  • 00:57 If we see, you know, the first country starting to get some kind of an agreement with Trump, some kind of way to moderate at least a little bit the impact of the tariffs,
  • 01:07 then people will might maybe gain confidence on that in the market could find a shore of footing.
  • 01:11 However, I think that another way to look at it is,
  • 01:14 and this is from
  • 01:16 my colleagues over in Bloomberg Intelligence, they're talking about this idea that however longer that carries on dragging out each day, we don't have certainty that uncertainty is bad for the profit outlook on companies.
  • 01:28 So every day that we don't see some sort of relenting in the tariffs, that's probably
  • 01:33 a bad news day for markets,
  • 01:36 Paul.
  • 01:36 Usually there's an asset class that leads.
  • 01:39 Which asset class is leading right now?
  • 01:45 I
  • 01:46 mean, I think that people are paying more attention to the US equity gauges than to anything else right now.
  • 01:51 What we did see was that very big spike in the VIX as well
  • 01:54 yesterday,
  • 01:56 an idea that maybe, you know, people are just so confused now about what the direction could be that they're starting to get a little bit more worried.
  • 02:03 I think it was really interesting as well that we saw that big sell off in Treasuries yesterday.
  • 02:08 Kind of counterintuitively, people have all sorts of
  • 02:11 explanations about why that could be the case.
  • 02:14 Maybe it was a forced liquidation in order to raise money.
  • 02:17 Maybe people worried about inflation, maybe people worried about what is going to what's good, what all the tariffs are going to do to the US
  • 02:23 spending.
  • 02:24 We're going to get auctions this week.
  • 02:26 So we'll see very clearly what that looks like in terms of demand,
  • 02:30 you know.
  • 02:30 But
  • 02:31 I think that for now, people paying first and foremost attention to what those headlines show and then what their stock market looks like after that.
  • 02:40 Paul, very quickly,
  • 02:41 when do we see a bigger reaction in the currency space?
  • 02:50 Well, the currency market has seen some pretty big moves.
  • 02:53 If you look at the Australian dollar for example, not necessarily you know the the the G3 currencies, but there has been lots going on there.
  • 03:01 I think one thing to watch out for when it comes to that is what China does with the UN, which is quite important as that anchor, if it does start to let it go a little bit more than that, really could see a big whip up in currency market volatility right across the board.