A rate cut by the Fed or other central banks is not the antidote to what ails us right now: CIO

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“Central bank theme. Has been a driving force behind supporting markets for the better part part of say. A decade now. Why is it that the coronavirus fears.

Really did respond to the idea that the central banks could actually step in and help because they realize our rate cut or a2 is not a vaccine. And it s not going to address supply issues out of china. It s not going to make people get back onto a plane or get back into a casino. It s just not the antidote to what ails us right now.

What what the antidote is is actually seeing a plateauing of this spread that s the answer to this not some wasted rate cuts..

Which i know that they ll do. But it s not going to really help economic growth. Now maybe it ll grease the wheels of the financial markets for a short period of time. But i m more afraid that they do this the markets rally for a short period of time.

And then just give it all back and then these cuts are not then wasted. So it s interesting to put this move in perspective. With what s happened over the course of the sas past say year year. And a half with regard to drawn out trade conflict between the world s two largest economies that seem to get resolved at the end of last year.

The trade war had nothing like this in terms of impact..

So the economic growth scenario is still there. But this is a bigger threat than the trade war apparently. No question. The world was not prepared in terms of the pace of economic growth and the valuations of asset prices going into this global growth was only about 3 us growth was only about 2 you had credit spreads at the tightest level since oh.

Seven you had valuations in the equity markets at twenty times earnings. We were not set up for something out of left field that is gonna rock economic activity. So where as sars it was after the nasdaq had fallen eighty percent h1n1 it was after the financial crisis. When we actually had more important things to worry about so it was sort of the positioning for this that is making it more profound.

And what we want to show peter right now viewers and listeners on sirius xm channel 112..

We re showing a graphic that says falling below key levels. The 200 day moving average is a longer term trend that a lot of traders like to watch for a indicator of momentum. Longer term the s. P.

500. Bank etfs down transports energy industrials materials financials discretionary basically every sector out there along with the broader market is now falling below a key longer term trend. Line. Does that mean that this is the buy the dip.

Opportunity people have been waiting for well that that s the mentality..

That that people have been trained on for the past decade. Because central bankers would be the stimulant for that kind of behavior. But i think people have to be more careful this time around because they have to understand that central banks right now are gonna be shooting blanks. They re gonna give us what they think they can give us.

But there s not there s gonna be blanks in that gun. I m just warning people again the the answer to what eles us is an end to the spread of this virus. Not central bank rate cuts you ” ..


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