Liz Ann Sonders and Kevin Gordon Talk Market Response to Iran
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What is the main topic discussed in this episode?
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For this wonderful segment of the program, nationwide and to the original San Francisco of Charles Schwab, Lizanne Saunders and Kevin Gordon join us this morning. David Rosenberg published up in Toronto and emphasized the word hope. You lead in your note with the word hope. Lizanne Saunders, gauge the hopium out there right now.
Well, yesterday there was a lot of it. I think it's impossible given the instability of how we get information and narrative changes and headlines to look at a day like yesterday as something akin to what we saw last April 9th. I think there's still a lot of unanswered questions, even just, you know, you're reporting on Trump's comment about the ceasefire being contingent upon the Strait of Hormuz opening. Yet yesterday it was, you know, we we might end this thing even if the Strait doesn't open. So here we go again.
Exactly. Kevin, given those crosswinds out there, you're talking to your clients. What's the message? Is it to look past all this craziness and focus on the fundamentals? What's the conversation?
Yeah, I mean, especially with any conflict like this, you never want to make a knee-jerk reaction. I mean, we've adjusted how we think about markets and the economy responding to this as it's continued to drag on. Clearly, we've dialed back expectations for what growth is supposed to look like. But I often think, you know, in terms of an investor's reaction, I can't help but think about the Jack Bogle quote, don't just do something, stand there. And I think in this moment, you know, it kind of feels because you don't want to make you can't have a high conviction view on any particular asset class. I think right now you can have some conviction maybe on something like commodities. That's somewhat obvious.
But I think for the equity market, you know, to Lizanne's point about how we get information these days, I mean, that that gap between Washington and markets is narrowing every single day in terms of policymaking's impact on day to day equity moves. So I think that needs to be taken into consideration.
I mean, let me do this, Paul. Kevin Gordon out with an incredible chart. You know Lizanne Saunders hasn't seen it.
Let's cover it right now with Lizanne.
What is the market's response to the war in Iran?
Well, you know Lizanne Saunders didn't create it. That's for sure.
The Standard & Poor 500's forward 12-month PE was a lofty 23.1 and has come in. I'm going to go Stan Fisher on you here. It's coming. I'm popping 15% or 20% from 23.1 into 19.6 as well. Does that scream opportunity for you, a sub-20 S&P multiple?
Yeah. This has been pure multiple contraction in this corrective phase because earnings estimates have continued to go higher. I think the answer to that will be better defined once we actually start earnings season. We know why energy sector estimates have gone up. Tech sector estimates have gone up with a concentration in just a couple of names. The analysts really haven't done much adjusting to estimates for a calendar year, maybe because they're waiting for as much time as possible to get up to the eve of reporting season and or wait till they get commentary from companies.
Kevin, we had a rotation, I think, kind of late last year coming into prior to the war, maybe coming out of some of the high growth, high multiple stuff that have been the drivers of this market to maybe some more cyclical stuff, small and mid-caps. Was that just a short-term trade-y thing or is that something longer to you guys?
Yeah, you know what's been interesting is that even on a day like yesterday when you had tech
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Chapters
6 chapters
1
What is the main topic discussed in this episode?
0:00–2:34
2
What is the market's response to the war in Iran?
2:34–4:02
3
How is hope influencing market sentiment?
4:02–7:16
4
What strategies should investors consider during conflict?
7:16–13:23
5
What are the implications of PE ratios on market opportunities?
13:23–13:45
6
How are earnings estimates affecting market perceptions?
13:45–16:23
Speakers
7 identifiedMore from Bloomberg Talks
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