Well debate that today with Investment Committee bob dimond is here with us today. So is jeffrey curry. He will tell us where oil is likely heading next. Lets welcome in the Investment Committee. Joe is here. We said bob dimond is here the former ceo of barclays bob its great to have your insights today into the collective mix. Your money is on another wild ride you tell me. The dow hasnt gone up two days in a row for more than a month we had a thousands point gain which is 145 points. What does it tell you about whats happening i tweeted out last night been consistent i said sell the rally. I think you continue to sell rallies. Until we see the coronavirus cases peaking in the u. S. , i dont believe were going to see the bottom of the market the market may be discounted by a bit. Here is how i look at it in a very basic sense 2019 were about 30 based upon the thought were going to have a return to growth five quarters of Earnings Growth since we didnt get that and theres doubt as to whether or not were going to recessions. Whether we will recover, youve got to retrace that 30 . I can be off by a few percent here or there but my baseline cases were down 30 from the highs. How much of this do you think, sfrn its even if its i marg margin, is doubt the administration is doing enough to mitigate this at this point is this any part of the uncertainty were seeing in stocks i think, today, its close to 100 of the uncertainty. You follow the futures last night. After we closed we were negative about 200 points President Trump gave his speech. They went positive this morning we have been selling off as people reevaluate that people last night. They felt it was amateurish. We have bounced again. We bounced about 20, 25 minutes ago. Vice president pence and President Trump said keywords here they said we will find support for the travel industry which was missing yesterday. In the last 24 hours the market has been keying off what the president is doing if he gets this right, it can help right now the market is voting on what he said last night and says its not enough it doesnt feel thought out. It will have to be bipartisan tax cut and this is not a president that has built a lot of bridges across the aisle. We saw a moment ago at the white house the president is meeting with Insurance Industry executives theyre not there in terms of the white house ready to announce anything dramatic or specific on that what more can you tell us . I saw you walking out of the room where the president and those executives are. Reporter the president did not take questions i asked the president what else is in your economic plan and when are you planning to announce it. He did not take that question and did not respond in any way we dont know when hes going to make this announcement last night, the president said he had some major and significant economic announcements he would be making at a press Conference Today. Im told by officials here that announcement stunned people who were inside the white house because they were not expecting the president to announce he had an economic plan ready to go largely because the plan was not ready to go behind the scenes. Its going to depend a lot on secretary mnuchin and larry kudlow going up to capitol hill and working to Senate Republicans to get some buy in on what they might be able to accomplish i spoke to secretary mnuchin in the west wing, i asked what was in the plan. He said well have more on that later today. Expect details, tbd. For now, as of last night, there was not a finalized fully baked plan ready to go now they will be working on it throughout the day there is a press conference at 5 5 30 this afternoon thats scheduled on coronavirus thats a possible point where they might roll out some more of these economic proposals nothing yet. Do you want to address the issue of what some perceive to be mixed messages or the lack of coherent response to whats taking place i ask you that because the Vice President just said and it was a line that he first said last night that the average american is of little risk of contracting the virus when you have dr. Scott gotley, yesterday saying, quote, we may be entering a period of accelerated cases. The country could look very different over the next couple of weeks the white house form Homeland Security adviser, tom bossert saying quote, its now or never for the u. S. If it hopes to keep coronavirus from burning out of control. That sounds a whole lot different than the message were getting from the Vice President and the president himself. Reporter thats right, scott. You dont hear that level of urgency from officials inside the white house up to and including the president himself. They consistently are using this line that the risk to most americans is low for contracting the coronavirus. The president says he is praising the cruise ship industry which is ready to go to the next level in terms of screening and Health Mitigation efforts. There are those on the outside who say the cruise industry should not exist as it has in the past at all given coronavirus out there thats spreading throughout the country. You dont hear thaturgency fro inside and the reason is because the president hasnt wanted to really embrace the idea this is absolutely definitely going to impact most americans. He just resistant to that idea doesnt want it to become a selffulfilling prophesy i reported the president was extraordinary mad at cdc officials that said its a question of when, not if, coronavirus is going to impact the united states. The president was angry at cdc officials for saying that publicly and let them know that he was angry about that. Now, the coronavirus is impacting the united states. The president still, though, reluctant to sort of embrace the more extreme proposals that we have seen out there. This is a president that wants to manage all of this as best he can and not incite any panic the number of cases in the u. S. Up ten fold in ten days well come back to you as needed bob, id like to get your thought os on the general environment. The market and what youre thinking someone who is running a business that used to run a Large International bank i think the impact on the economy is real. The impact on the Financial Services industry is real. I think, i suspect were probably over estimating the Short Term Impact but were probably underestimating the long term impact i think, you know there are real consequences to having a crisis such as were having right now you think the market has over reacted . I dont really look at it as much from a short term perspective but if i look over a period of time, it does not feel at all because of the impact that were going to have on the economy that the market has bottomed i would not at all be surprised if we saw a very healthy bounce down the road. I think we have had crisis before i feel confident that if we have the right targeted fiscal investments, if we have the right governance that we can see through this crisis. If we do the underlying economy is strong. I can see a healthy bounce i dont see that bounce in the very short term. Joe, lets go with that uncertainty is the mother of all market woes. We still think its too early to jump in. He says ubs, while its not our base case, a quote garden variety recession is possible. Could send the s p down to 2500. Theres commentary like that today. How do you see it based on what bob said and the way the market gain evaporated today. I think you asked if i felt this was a process and its going to be a process. I dont know why we cant accept that as an investment community. If you think about the vie loechbs t violence of the sell off we experienced in the last week of february, it scores as the fourth of the five greatest weekly sell offs in the history of the markets if you look at the other incidences, youre talking about after 1987 tarp was passed in 2008 when the market fell in one week 18 . Youre talk about 2000, 2001 in each of those circumstances it took two years. That was the shortest duration it took two years to recover other situations it took 7 to 5 years. I think we just have to accept this is part of the process. I agree with what bob is saying in terms of there will be a recovery i think in the near term, unfortunately, we have lost the focus on where the flows of capital are going. As a formt it seems as if we are flirting with negative rates. How would you feel about negative rates as a former bank ceo and is that a place where we want to go look at europe. They still have serious earnings issues you look at the u. S. And this is not a banking crisis when we sit and contrast this to 2008 when it was truly a banking crisis, we all remember morgan stanley, merrill lynch, all of them were insolvent without serious monetary stimulus in the tarp program and other things that went on today we look at the u. S. Banks and they are down 30 to 40 from the peaks but they are very healthy. Liquidity is good. Capital levels are good. I think we have a very strong Banking Industry here. In compare and contrast that to whats going on in europe. To get to the core of your question, i dont think serious policy makers going to negative Interest Rates is a good thing i think that the policy makers both in the u. S. And the uk are going to avoid it. Certainly this crisis raises the percentage chance. Its a nonzero probability they may have to go there you stunned by the move we see in rates its a very interesting world. Someone said this yesterday but for the first time in the history of money, the entire yield curve is below 1 . Liquidity is really out there. One of our most important investments is south street securities its a private, nonbank Holding Company repo business. Since the fed has been active last october and november, south street securities has never been able fto provide more liquidity for clients. Theres a lot of positives this is not a liquidity issue. Liquidity is very strong you sort of look back to the days and the depths of the crisis when you were in the seat the fed made extraordinary moves. Now the fed is being forced to what some may be extraordinary moves. You think the fed did the right thing the other day in cutting 50 and what do you think lies ahead . Let me give you a strange answer i dont think it mattered that much one way or the other given where rates are and given where liquidity is we need very targeted fiscal stimulus to put that in perspective, it was the end of 2017, early 2018, when we had personal taxes cut, corporate taxes cut, massive spending until that point during this recovery, we have been narrowing is deficit since that point, the deficits been widening. I think the number this year will be a trillion dollars deficit. We dont have the ammunition in fiscal policy that we wish we had right now and were going to pay the price for that having said it, we need targeted, very, very targeted fiscal stimulus. Certainly as we saw today in the Health Services area being cog any sanni Health Services area being cog any sannzant of the ft schools closing, well have to be more conscious of low income families and dual income families and how they cope with the kids being home. The bank ceos will be in the white house tomorrow with the president. If youre in that room tomorrow, what dwroup say about to you sa payroll tax idea the president used the word dratmatic measures they may take does that make sense to you . I think those targeted approaches are right from a bank point of view the question is clear that the banks are not the problem today that they were in 2008. Turn that on its head and can the banks be part of the solution i think if the regulators and the government are willing to either on a temporary basis or permanent basis ease up on some of the capital rules and encourage lending to small business, those are the ways the banks can be the solution. Its not from buying a lot of securities that was banking pre2008. Today thats not going to happen keeping liquidity in the market for small and Medium Enterprise businesses is something the banks can be very helpful on i was going to ask you guys, the bounce that you got of a thousands points if that was a sign the market is trying to put in at the very least, near term bottom not suggesting it is v the in all caps bottom. Now what do you do now that youve evaporated that in the middle of a correction you get some face tearing off rallies. Today looked like it was going to be so and it really gave up those gains. Thats a bad sign. Frankly, what the market is screaming at us is what you just said, bob. What we need now is fiscal policy the feds doing all it can. So is the ecb. Peoples bank of china this is on fiscal policy supposedly were getting a Conference Today at 5 30 from the president. Lets see if hes got the message. It has to be specific. It has to be plausible thats really what was lacking yesterday. If you think were going to have a recession, do you think thats priced in enough yet in the market and if not, how much further do stock s have to go down to reflect what could be the reality. It depends on the velocity in the te clidecline. Were down about 18 we have 40 if you really see things fall off a cliff. I want to go back to your question as the market lost confidence in the administration id say without a doubt, not only has loss confidence in the administration but ive lost confidence in the fed. I think the 50 basis points was completely unnecessary i think it showed panic reaction without being well thought out until you see that confidence being restored, then you have an issue. Everything is bipartisan its an election year. Youve got the democrats have weakened enemy you mean everything is partisan right not bipartisan. Partisan. Even when trump spoke said im going to talk to republican leaders. Not im going to talk to democratic and republican leaders. The republicans arent in favor generally have not be in favor of payroll tax cuts nor do i think they will help. The market wants some level of uncertainty that some level of fis sal stimulus is coming and the number of cases is peaking, has peaked. Theres real human suffering. We have to see that part the health side of this go on. It doesnt feel like thats very dlo close to a solution. If i put in the situation, one of the unintended consequences, youre not going to be slow. Youre going to be ahead of the pack in terms of cancelling travel theres part of that that will feel comfortable too like when else can i cancel all travel and tell people to use Video Conference there are some changes that are going on because they are slightly convenient given theres a crisis and they have real substance i think well see more impact in the economy in the short term than the market expects which means were going to see lower lows but i think in the long run some of these things like if we really make a difference in terms of technology and people being able to work from home and we have a lot of advantages there, there could be positives over time. Some of the unintended consequences, i think, really lead me to believe were underestimating the impact in the short term but probably over estimating it in the long term all that depends on a Health Solution the other big issue were following is the price of crude oil. It is getting a bounce after the worst day in nearly three decades. The question now is where does it go from here. Lets welcome in jeffrey curry hes global head of Commodities Research for goldman sachs. You have this note that was the talk you say the prognosis for the oil market is more dire than in november of 2014 when a price war last started as it comes to a head with the significant collapse in oil due to demand due to the coronavirus. It sounds like youre describing a perfect storm to drive prices lower. The question to you is how low i like to think about this price war as being a second round effect of the virus. The reason i say that is the collapse in demand in the collapse in prices created the leverage for russia to really start this price war i dont really like to call it a price war. I like to call it a market share strategy we like to emphasize the the economics or rationale of Production Cut never made sense to begin with. Going back to 2017, opec plus producers cut 4. 4 Million Barrels per day. This led to a 5. 7 million barrel per day rise in nonopec production 4. 4 down 5. 7 up more importantly the economics behind that 5. 7 million barrel for bay rise for miserable it was all taken out of equity shareholde shareholders kwhawhats a reasonable pric . If the market over did it, whats reasonable to you and say the next six months . Our base case is really one of 30 a darbarrel this is predicated on the higher level of productions being extended to the end of summer months and demand catching up shifting into a deficit by the end of Third Quarter and early Fourth Quarter theres a lot of noise around a potential agreement with the announcement out of Alexander Novak that they are willing to come to the table in may or june its important to emphasize two things one, an agreement is not necessarily bullish. It could be an agreement to extend the market share strategy in terms of thinking about the second point is that if they meet in june, the earliest youre talking about an impact of supply is in june or suaugust the next six months likely to be painful is pretty reasonable not sure if you listened to mark fisher on yesterday who said this could go on for a couple of months he said its an over reaction from russia and saudi arabia, what they have done. Is there truth to that no because if you look at this, this should have happened back in 2015 and 16 why did it not happen is because china hit the stimplus button, opec cut production and then you had u. S. Fiscal policy after that that kept prices artificially supported around 60 a barrel and you never saw the rebalancing that needed to take place. With the prices at these lower levels, were seeing an acceleration of the reblaalancig process that will create a healthy level. Saudi arabia will be better off by extending this this ye