Rob Caroline, Lisa, Ten Percent discussed on Bloomberg Surveillance
He even if we if we ever have rob Caroline I'm Lisa when there's a high pressure it's gorgeous out. why it's so beautiful so please explain thank you rob greatly greatly appreciate this is a joy and a start this Tuesday you know it's like new years in the business world every you know it's like a happy Tuesday kind of time it is wonderful to start with Laurie kill the scene of RBC on the equity markets there's a lot of navel gazing this weekend Lori about what to do all this other noise bonds currencies sterling under one nineteen X. cetera argues steadfast in equity coal or who view amended things so I would say the only thing that's really changed in our view over the past you know say a week week and a half since we had that awful Friday were the trade war escalates again is the you know I I would say in the short term at least we have more conviction that we're going to see a full on ten percent pull back and we've said that the risk of having that pull back more into what we call a growth scare we think the risks there have risen it's not our base case by gross here I mean something like took what took us to the lows of twenty ten to twenty eleven or twenty sixteen where you saw basically like a fifteen to twenty percent pull back in the market that's not our base case but we do think the risk of has risen significantly so Laurie a ten percent pull back would that be across the board and just sort of talking about correlations everything going down at once or they're going to be certain sectors hit harder so you know what we always see on these really bad days and you don't necessarily see than the weekly data or the monthly data but we do tend to see some of the names most heavily armed by hedge funds particularly in the T. I. M. T. complex the software space IT services things that might not necessarily be associated with the trade war directly but that are simply widely held a proxy for equity exposure among the hedge fund growled those are things to watch out for I mean you know we we still like things like utilities read consumer staples we're not necessarily saying that they go up in a pull back we think they go down last Lori were Juergen free particularly when Abramowitz's in the room one is T. I. M. T.. internet media and telecom so I'm a child of the tech bubble I came into the business back in two thousand and that's how we used to talk about it then and and what we find is you know get has moved around the set a little bit over the last year that's really how a lot of hedge funds and a lot of growth investors there tack allocations they lump media and telecom and yeah we call that with those of us on the later vintage Lisa call the stocks of no profits continue studies that some of them do but it is interesting to see what you're talking about Laurie that the idea that hedge fund ownership is a recipe for volatility and I'm wondering what your increasingly telling in advising clients to look at hedge fund ownership of stocks and then saying stay away. it's something that we've looked out for a long time we have one products that we put out we put this out in August and you know we do go through and we look at the names that are most heavily owned by hedge funds both in terms of dollar value in terms of market cap exposure on percent of market cap owned by hedge funds what we've actually found it if you go back and you look at last year in the second half of twenty eighteen when you flipped over into the second half of the year it was like flipping a switch in the names most heavily on the by hedge funds just the biggest market cap names underperformed pretty soon steadily until you got to basically kind of early December and then they were kind of in line performers but we saw those stocks start to break down before the market this one and I'm wondering and that Lori I know that you've been bearish for awhile the amount of bearish sentiment in the market is getting to be a sort of growing day and at what point is that a positive indicator for stocks so you know it's interesting we have a score card where we monitor different drivers for equities in one of those drivers is investor sentiment positioning and we consider it to be mixed and the mixed is on the negative side we still have positioning which we think has been quite euphoric and in the process of unwinding if you look at C. S. T. C. data it's telling you that it's starting to catch up with where spent ten minutes south already is now sentiment has been quite bearish and on some metrics if you look at a a I I the American Association of individual investors retail sentiment is quite bearish that's usually a good buy signal but the positioning especially on the institutional side which is what you're saying with that CFTC data it's been lagging a bit behind is catching up to where that bearish sentiment already is. thank you we will continue or throw that she could be with us for a substantial time here this morning she's with RBC capital markets Lisa Howard Davies is with us here a bit ago of course just iconic former director of London school of economics is public service an FSA to London all and he was just surgical I'm negative interest rates he's not willing to throw the towel in in the experiment but he said the ramifications of this day by day become ever bigger absolutely I tried to explain to my son negative interest rates is really interesting basically you do dishes for may and then you pay me forty Bucks. you're looking at me with is a look at your face like everyone in this room right now had the joy of Labor Day have you done your summer reading yeah yeah any negative with Michael bar what did you do at your house to move the children forward towards school barbecued hamburgers and talked about class there we go there you go nine eleven and when in doubt freedom and. it should stay with this world wide this is Bloomberg. let's get.