Risk Manager, Erin, China discussed on Bloomberg Markets


He is a bull market becomes former also former risk manager a Q. R. capital management Erin thanks so much for joining us I guess where we are in the discussion of the corona virus is has it peaked in China number one and number two how much will it spread outside of China what are some of the latest scenarios that you're thinking about well I don't know the answer to your questions and and and they are important questions but for a long term investor the immediate market impact all the things we're seeing now all the impact on first quarter earnings in first quarter GDP those are all about the containment efforts not about the virus itself and so you know we're seeing airline stocks fall we're seeing supply chains disrupted and such this is not a big deal this is temporary the containment efforts won't last forever and the spending lost during the containment efforts will rebound and actually disasters of all sorts you know means increased spending so the one scenario really worried about their disaster scenario the pandemic of nineteen eighteen flu kind of scenario is still very unlikely but if it happens it will have a dramatic effect on interest on human life but I'm I'm the attorney but the pattern is different it's not you know the investment you might want to avoid if you thought that was going to happen or not the ones that are being shipped today serving investors who are focused very much on the short term you know first quarter effects on earnings and GDP are are missing what the really big bet here is we don't know at this point what the chances of a mass scenario you know it it picnic kills tens or hundreds of millions of people but it's pretty unlikely I mean I have to say it you know probably one in a thousand we're talking about something on that order although nobody really knows the two most likely scenarios are we get a containing in which case it's a kind of none of that but maybe not for the thousands of people who died but but for the economy as a whole or that it becomes endemic you know there for coronaviruses endemic to the world already because about twenty five percent of colds you know when new way and might not make much difference it might have to be a minor increase in the amount and severity of colds or or perhaps not even that so if it gets out of continuance early disaster the disaster is if it gets out of containment it becomes a pandemic to the world and it maintains a high mortality rate but that's as I say it's very unlikely scenario that said there is a question of how much growth there could possibly be in a world economy that slowing down given the fact that people are canceling their travel plans and that there's a lot of services related business that won't be compensated for how do you sort of counter that argument and say longer term even that won't have that big of an impact well I live on the Upper West Side and we're we're really progressive area where if anybody said you know she should avoid Chinese people because of the virus they would hang up on a lamp post but the Chinese restaurants are empty and the Chinese delivery services are offering steep discounts for anybody who's a we get the food but that doesn't mean people are going to eat less over their lifetime right it doesn't mean people are not going to go to other restaurants or orders you know spend the money on something else the people who are canceling cruises today or maybe not going buy tickets for the Tokyo Olympics other marketing change your total lifetime travel budgets as a result they're going to spend the money on something else so for the long term diversified investor's standpoint this is kind of about about you expect the US government to enact any specific policy here should the corona virus in become more pronounced in the U. S. you know I don't see what they can to be Frank you know you're seeing the CDC advice come out in the CDC advises the same advice to give you every clue season right wash your hands you know go to a doctor if you have a high fever and respiratory problems and so on if it becomes endemic that no it's just part of the normal you know winter flu season or winter cold season actually because of the corona virus and if it's a major pandemic of the sort where we've got hundreds of millions of people dying in the world there's also not much we can do you know we don't have enough antiviral drugs or respirators to treat the majority of the people women for the virus will be what it's going to do you know there's there could you can do some public health things but you know not very much most of this depends on the virus Erin I just real quick here thirty seconds says the former chief risk manager at a Q. R. capital management would you be buying into this into this route I'm a long term investor I have not changed any allocation as a result of that so I'm just staying put at this point if we see that it may become a global pandemic you know this kind of the eight nineteen eighteen flu variety then yes then it's time to make an allocation changes but I'm much more concerned about my health about my portfolio all right first of all to Aaron Aaron brown columnist at Bloomberg opinion also a former chief risk manager a Q. R. capital management joining us fantastic column he wrote for Bloomberg opinion I highly recommend people read about three virus scenarios that markets have to consider the first being that it's nothing and it's contained to the second page that is becomes endemic although it's not that fatal and the third that it is a catastrophic pandemic in talking about how all in all it the most likely scenario is it won't have as big of an impact in the longer term on investments that said we certainly are seeing the panic sort of take cold a little bit more today as we see a particular bond yields just falling dramatically not only that but also the correction in the S. and P. and the nasdaq right now let's head over to our ninety day one studios in Washington DC Amy Morris world national headlines email all right thank you Lisa Joe Biden winning the endorsement of South Carolina representative Jim Clyburn the highest ranking black member of Congress and house majority whip Clyburn's backing could provide a much needed boost for Biden before south Carolina's primary on Saturday by the notes Cliburn's role in securing the democratic votes for the twenty ten health insurance overhaul that ranks as president Obama's signature domestic achievement America's roads are growing deadlier.

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