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Stocks Need to Get Cheaper, Schroders' Olu-Pitan Says

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Bloomberg Apr 17 20:50 · 11.4k Views

Stocks Need to Get Cheaper, Schroders' Olu-Pitan Says

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  • 00:00 We're in this acute phase of shock right now.
  • 00:03 A lot of investors were not expecting this level of tariffs.
  • 00:06 So it's causing some concerns.
  • 00:08 And there is a debate whether this is a trade war murfing into a financial war.
  • 00:12 And so that's creating a lot of nervousness and it will it will require time for this to ease.
  • 00:18 Yesterday, Powell didn't provide the necessary commentary that investors wanted with regards to providing that liquidity that equities really love.
  • 00:28 And so it feels like the market market is left to its own devices and to and
  • 00:33 to have a lot of concern with regards to the noise.
  • 00:36 So let's let's doomsday this out a little bit in case we haven't already
  • 00:40 this idea of not getting that liquidity or that Fed put what happens if we never get it?
  • 00:45 What is the worst case scenario in terms of these markets that as Chair Powell said are are functioning correctly, have plenty of liquidity at the moment?
  • 00:52 Does that simply just mean it takes longer for markets to recover from any sort of sell off?
  • 00:57 Well,
  • 00:57 we just have to reset at the right price.
  • 01:00 And so it becomes a valuation issue in that things just need to get cheaper.
  • 01:05 And so that's why, yes, we'll continue to have volatility, but that reset will happen.
  • 01:10 There are lots of attractive stocks, lots of innovation that still exists.
  • 01:14 It just means that the growth rate that we were projecting in January is that much lower.
  • 01:19 The Wall Street Journal keep writing pieces about the fact that the Buy the Dip strategy, which has worked so well over the last few years,
  • 01:26 is now being seriously called into question and investors are not necessarily
  • 01:30 doing what they have done for the last few years.
  • 01:33 How different is this environment for investors relative to where we've been over the last
  • 01:38 10-15 years?
  • 01:40 I think it's because the instability is coming from the US.
  • 01:44 So for the last 10-15 years we have stability.
  • 01:48 We could price, we could,
  • 01:50 we could more or less
  • 01:51 anticipate the direction of U.S.
  • 01:54 policy.
  • 01:55 Now that you have so much policy unpredictability, yeah, you don't have that tailwind providing you with that comfort to buy the dip.
  • 02:03 So what do you do?
  • 02:04 I
  • 02:04 you talk about a reset,
  • 02:06 Do I stay invested during this reset?
  • 02:07 How do I manage a reset
  • 02:09 to a lower price that allows me an attractive entry point?
  • 02:12 Once again,
  • 02:13 you need a lot of liquidity, so some cash right on the sidelines, but look elsewhere.
  • 02:18 Does it just have to be the US right now?
  • 02:20 There are lots of other markets with much better valuations outside of the US.
  • 02:25 Europe, we've seen that this year, Japan
  • 02:27 recently and they can go up.
  • 02:29 If the US goes down,
  • 02:30 we think that we will see a capital reallocation.
  • 02:33 So a lot of that demand for the
  • 02:35 US, unquestionable demand for the US has to move elsewhere.
  • 02:39 And there will be a time where those markets will go up if the US goes down, particularly if we have a consumer recession in the US, which is something we're not used to.